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6.1.1 Product - A Conceptual Framework

Before diving into product strategies, it is essential to grasp the fundamental concept of a product. .

The Five Levels of a Product

A product provides value to customers across five levels, each adding layers of satisfaction and differentiation. These levels are:

  1. Core Benefit
  2. Basic Product
  3. Expected Product
  4. Augmented Product
  5. Potential Product

1. Core Benefit

  • Definition: The fundamental service or benefit that the customer is truly buying.
  • Example: In the case of a hotel stay, the core benefit is rest and sleep.
  • The customer chooses a hotel because they need a place to sleep and rest while traveling, not just to book a room.

2. Basic Product

  • Definition: The basic physical and tangible elements that deliver the core benefit to the consumer.
  • Example: In a hotel, the core benefit (rest and sleep) is delivered through:
  • A room
  • A bed
  • A bathroom
  • A desk and closet
  • These elements are necessary to fulfill the core benefit but are often insufficient by themselves.

3. Expected Product

  • Definition: A set of attributes or conditions that customers expect to be provided along with the product. Without these, they will be dissatisfied.
  • Example: In a hotel:
  • Clean bed, pillow, and mattress
  • Fresh towels
  • Soap and toiletries
  • A table lamp or fan
  • Why it’s expected: Competitors typically provide these attributes, making them the standard. If these are not included, customers will likely choose another provider.

4. Augmented Product

  • Definition: Features or attributes that exceed customer expectations, providing a unique selling proposition (USP) and differentiation.
  • Example: In a hotel:
  • An air-conditioned room (when others only provide fans)
  • A TV with cable channels
  • A mini-fridge, sofa set, or premium toiletries
  • Augmented features make the customer happier by offering something additional.

5. Potential Product

  • Definition: All possible future augmentations or transformations that a product may undergo to delight customers and create new value.
  • Example: For a hotel:
  • Smart TVs with OTT subscriptions
  • Business-friendly features like video conferencing
  • Advanced IoT integration, such as smart lighting or voice assistants

Positioning: Point of Parity (POP) vs. Point of Difference (POD)

The product levels align closely with positioning strategies: - Point of Parity (POP): Attributes that are expected because all competitors offer them. These form the expected product. - Point of Difference (POD): Features that exceed customer expectations, making the product stand out. These align with the augmented product.

Understanding Through Examples

  1. Hotel Scenario:
  2. Core Benefit: Rest and sleep.
  3. Basic Product: Room, bed, bathroom.
  4. Expected Product: Clean sheets, fresh towels, basic toiletries.
  5. Augmented Product: Smart TVs, luxury toiletries, mini-bars.

  6. Potential Product: AI-driven room personalization, VR entertainment systems.

  7. Customer-Specific Needs:

  8. Honeymoon Package: Focus on luxurious experiences and privacy.
  9. Religious Tourism: Basic amenities and proximity to pilgrimage sites.
  10. Adventure Tourism: Safety supplies and rugged facilities.

Adapting to the Market

The differentiation of a product depends on: 1. Customer Needs: What the target customer values most. 2. Competitor Offerings: What competitors are providing as expected or augmented features. 3. Market Context: The type of market and its unique challenges or demands.

By continuously revisiting these factors, businesses can rediscover new opportunities to provide value and create sustainable differentiation.