According to Philip Kotler, who is an economist and a marketing guru, a product is more than a tangible 'thing'. A product meets the needs of a consumer and in addition to a tangible value this product also has an abstract value.
In order to shape this abstract value, Kotler uses five levels in which a product is located or seen from the perception of the consumer. These levels indicate the value that consumers attach to a product. The customer will only be satisfied when the specified value is identical or higher than the expected value.
1. Core Product
This is the basic product and the focus is on the purpose for which the product is intended. For example, a warm coat will protect you from the cold and the rain.
2. Generic Product
This represents all the qualities of the product. For a warm coat this is about fit, material, rain repellent ability, high-quality fasteners, etc.
3. Expected Product
This is about all aspects the consumer expects to get when they purchase a product. That coat should be really warm and protect from the weather and the wind and be comfortable when riding a bicycle.
4. Augmented Product
This refers to all additional factors which sets the product apart from that of the competition. And this particularly involves brand identity and image. Is that warm coat in style, its colour trendy and made by a well-known fashion brand? But also factors like service, warranty and good value for money play a major role in this.
5. Potential Product
This is about augmentations and transformations that the product may undergo in the future. For example, a warm coat that is made of a fabric that is as thin as paper and therefore light as a feather that allows rain to automatically slide down.
The competition between businesses focuses mainly on the distinctiveness of the Augmented Product according to Kotler. It is about the perception a consumer experiences when purchasing a product and it is not so much about value. He states: "Competition is determined not so much by what companies produce, but by what they add to their product in the form of packaging, services, advertising, advice, delivery (financing) arrangements and other things that can be of value to consumers".
For production companies it is important to deliver products in an upward trend from 'Core Product' to 'Augmented Product' and to have the potential to grow into the 'Potential Product'. Under the guise of 'stagnation means decline', innovative companies such as Philips and Volkwagen focus on the latter category.
Each level adds value for the customer. The more efforts production companies make at all levels, the more likely they are to stand a chance to be distinctive. At the 'Augmented Product' level, the competition is observed in order to copy certain techniques, tricks and appearance of each other’s products. This makes it increasingly difficult for a consumer to define the distinctiveness of a product.
To be able to tower over the competition, production companies focus on factors which consumers attach extra value to such as extreme packaging, surprising advertisements, customer-oriented service and affordable payment terms. This is not just about satisfying the customers and exceeding their expectations but also about surprising them.
- Kotler, P. & Sidney J. Levy. (1969). Broadening the Concept of Marketing. Journal of Marketing, January 1969, Vol. 33, Issue 1, pp.10-15. (Winner of the 1969 Alpha Kappa Psi Foundation Award for the best 1969 paper in the Journal of Marketing.)
- Kotler, P. (1967). Marketing Management: Analysis, Planning and Control. Englewood Cliffs, N.J., Prentice-Hall.
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