Chapter 10

A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information and ideas.

Product Level - is an important aspect in marketing that a marketer has to critically understand and address. There are five different product levels and each level adds more customer value, and the five levels constitute a customer-value hierarchy.

The basic level is the core benefit: the service or benefit the customer is really buying. A hotel guest is buying rest and sleep. The purchaser of a drill is buying holes. Therefore marketers in the first place have to see themselves as benefit providers.

At the second level, the marketer must turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom and towels. At the third level, 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, and bathing gel etc…

At the fourth level the marketer prepares an augmented product that exceeds customer expectations. In developed countries, brand positioning and competition takes place at this level. In developing and emerging markets, competition takes place mostly at the expected product level.

At the fifth level is the potential product, all the possible augmentations and transformations the offering might undergo in the future. At this point companies search for new ways to satisfy customers and distinguish their offering.

Basing on product augmentation, it is here that differentiation arises and competition increasingly occur which also leads the marketer to look at the user’s total consumption system: the way the user gets and uses products and related services. Each augmentation adds costs, however, and features and benefits to differentiate themselves. As some companies raise the price of their augmented products, others offer a stripped-down version for less.

Product classification is yet another aspect that marketers use to classify 

products on the basis of durability, tangibility and use (consumer or industrial).

Durability and tangibility:

Non-durable goods are tangible goods normally consumed in one or a few uses, such as beer and shampoo. Since such goods are frequently purchased, the appropriate strategy is to make them available in many locations.

Durable goods are tangible goods like appliances that survive many uses, require personal selling and service, command a higher margin and require more seller guarantees.

Services are intangible, inseparable and variable.

Consumer-goods classification:

These are classified according to shopping habits; these products include convenience goods such as soft drinks, which are purchased frequently, immediately and with minimal effort.

Industrial-goods- classification:

Materials and parts are goods that enter the manufacturer’s product completely.

Takeaway: One of the important elements of marketing mix is Product. Any firm is most known by the product it is offering. The other elements of marketing mix are based on it. Therefore it is of utmost importance that the firm develops a sound product policy.

As mentioned in chapter 8 am fascinated with the topic of branding, and in this particular chapter I see exactly where branding comes in at the augmented product (fourth level). This is where a customer expects to see more than a clean bed and more than a white towel. For emerging markets branding is done at the third level (expected product), its done even earlier in the product level. 

Companies tend to raise prices of augmented products and others offer a stripped-down version for less; this aspect shows me how China and other Asian countries are trying to imitate high quality products in the US and Europe and offer similar products but for less money.