Three Levels

of a Product
Three Levels of a Product.
Consumers often think that a product
is simply the physical item that he or
she buys. In order to actively explore
the nature of a product further, let’s
consider it as three different products
– the CORE product,
the ACTUAL product, and finally
the AUGMENTED product. This
concept is known as the Three Levels
of a Product.

Three Levels of a Product

The CORE product is NOT the
tangible physical product. You can’t
touch it. That’s because the core
product is the BENEFIT of the product
that makes it valuable to you. So
with the car example, the benefit is
convenience i.e. the ease at which
you can go where you like, when you
want to. Another core benefit is
speed since you can travel around
relatively quickly.

The ACTUAL product is the tangible,

physical product. You can get some
use out of it. Again with the car, it is
the vehicle that you test drive, buy
and then collect. You can touch it.
The actual product is what the
average person would think of under
the generic banner of product.

The AUGMENTED product is the

non-physical part of the product. It
usually consists of lots of added value,
for which you may or may not pay a
premium. So when you buy a car,
part of the augmented product would
be the warranty, the customer
service support offered by the car’s
manufacturer and any after-sales
service. The augmented product is an
important way to tailor the core or
actual product to the needs of an
individual customer. The features of
augmented products can be
converted in to benefits for
individuals.

Features and
benefits of
products
Features and benefits of a product
are also relevant to the three levels of
the product. Products tend to have a
whole series of features but only a
small number of benefits to the actual
consumer.

Let’s look at this another way, if you

buy a Nintendo console it has many
features; for example you can play
games alone or you can play against
another opponent or two or three
opponents. You can also have access
to the Internet. Avatars are
adaptable so you can create yourself
and your friends. These are all
examples of features to the
consumer. However a consumer may
buy it because he or she wants to
stay fit and will use software and
peripherals to become healthier.
Becoming healthier is the benefit to
the consumer.

The consistent marketer will aim to

discover the consumer’s preference
for benefits and will match individual
features to the preference. That is
why professional salespeople for
example, often ask many questions
whereas a novice salesperson will
just tell you the features of the
product.

New Product
Development (NPD)
New Product Development (NPD) will
take in to account the consumer’s
preference for benefits over features
by considering research into their
needs. NPD aims to satisfy and
anticipate needs. NPD delivers
products which offer benefits at the
core, actual and augmented levels.

NPD might offer a replacement

product for a current line, it could add
products to the current line, it could
discover new product lines and
sometimes it delivers very innovative
products which the world might not
have seen before.

New products are launched for all

sorts of reasons. As we know from
our previous lesson on the business
environment, legislation i.e. changes
in the law can mean that companies
have to design and develop new
products. An example of this was
when we moved from videotape
recorders to digital and DVD
recorders. So products need to be
modified for changing target
markets.

Sometimes the company will need to

increase the volume that a
production plant delivers, since
maybe it is not running at full
capacity. An example of this would be
a food manufacturer of tinned soup
that has a factory which can operate
24/7, designing different derivatives
of the soup in order to lower the unit
cost of production. So product lines
are extended, in this case the reason
being is to ease operational
efficiency.

Intense competitive rivalry in the

market will also lead to the need for
NPD. Just think about your smart
phone and how quickly such products
go through their product life cycles,
throughout your customer life-cycle.

Change in any element of the

marketing mix would influence NPD,
for example there is a movement to
shop online and some products need
to be distributed via online retailers,
and the product is adapted to make it
compact and simple to deliver. NPD
can be driven by many influences
from changing consumer tastes to
the need to adapt products and
services for local or international
market.

Another marketing tool for evaluating

PRODUCT is the Product Life Cycle
(PLC). Also see the Customer Life
Cycle (CLC).
 Exercise – Three Levels of a Product
The CORE product is NOT the tangible, physical product. You can’t touch it. That’s because
the core product is the BENEFIT of the product that makes it valuable to you. So with the car
example, the benefit is convenience i.e. the ease at which you can go where you like, when
you want to. Another core benefit is speed since you can travel around relatively quickly.

The ACTUAL product is the tangible, physical product. You can get some use out of it. Again
with the car example, it is the vehicle that you test drive, buy and then collect.

The AUGMENTED product is the non-physical part of the product. It usually consists of lots
of added value, for which you may or may not pay a premium. So when you buy a car, part
of the augmented product would be the warranty, the customer service support offered by
the car’s manufacture, and any after-sales service.

Product or service or Core Product Actual Product Augmented Product

brand

Honda civic A motor car

2 weeks Thailand Holiday Two weeks in a resort Holiday insurance

Budget/No Frills Airline Food bought during your flight

e.g. Jetstar or VietjetAir–

Saigon U23

Excitement and
leisure

Nike

Association with the

best in sports
Product or service or Core Product Actual Product Augmented Product
brand

Dam Sen Park Food and supply

Answer – Three Levels of a Product
Here’s a recap before the answer
(below): The CORE product is NOT
the tangible, physical product. You
can’t touch it. That’s because the core
product is the BENEFIT of the product
that makes it valuable to you. So with
the car example, the benefit is
convenience i.e. the ease at which
you can go where you like, when you
want to. Another core benefit is
speed since you can travel around
relatively quickly.

Here are the answers. How did you

do?

Product or service or Core Product Actual Product Augmented Product

brand

Honda civic Freedom to travel A motor car Ford finance

Thailand Holiday Relaxation Two weeks in a Holiday insurance

resort

Budget/No Frills Gets you from A An airline Food bought during your flight
Airline e.g. Jetstar or to B cheaply journey
VietjetAir–

Saigon U23 Excitement and Sporting event Personalised shirts and other
leisure merchandise

Nike Association with Shoes and other Nike online allows you to
the best in sports clothing personalize your trainers

Dam Sen Park Leisure and Outdoor Food and supply

relaxation entertainment

The ACTUAL product is the tangible,

physical product. You can get some
use out of it. Again with the car
example, it is the vehicle that you
test drive, buy and then collect.
The AUGMENTED product is the
non-physical part of the product. It
usually consists of lots of added value,
for which you may or may not pay a
premium. So when you buy a car,
part of the augmented product would
be the warranty, the customer
service support offered by the car’s
manufacture, and any after-sales
service.