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Five Product Levels

The Five Product Levels model provides a way to show the different levels of need customers have for a product. These needs range from core needs to psychological needs. At each product level, more customer value is added.

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Five Product Levels

  1. 1. FIVE PRODUCT LEVELS (KOTLER) Submitted by: Arnold Sawe
  2. 2. FIVE PRODUCT LEVELS (KOTLER) CORE BENEFIT GENERIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT Use this template to describe the levels of your product, starting with the core benefit. At each level attempt to differentiate your product 1
  3. 3. Product Levels History & Importance (Kotler) • The Five Product Levels model was developed by Philip Kotler in the 1960s. The renowned economist presented that a product can be more than just a tangible entity and can be identified in five levels. • For Kotler, the definition of a product goes way beyond being a physical object or a service. He defines a product as anything that can meet a need or a want. This means that even a retail store or a customer service representative is considered a product. • The Five Product Levels model provides a way to show the different levels of need customers have for a product. These needs range from core needs to psychological needs. At each product level, more customer value is added. 2
  4. 4. Product Levels Considerations • The model considers that products are a means to an end to meet the various needs of customers. • Customers will choose a product based on their perceived value of it (Actual value has to meet or exceed expectations). 3
  5. 5. Product Levels Model Basis V A L U E 01 CUSTOMER NEED V A L U E 02 CUSTOMER WANT V A L U E 03 CUSTOMER DEMAND The Lack of a basic requirement The model is based on there being three ways in which customers attach value to a product: A set of wants plus the desire and ability to pay to have them satisfied A specific requirement for a product or service to meet a need I create demand for flavoured water I want clean, safe to drink water I need water to survive 4
  6. 6. Product Levels (Kotler) 1. CORE BENEFIT The core benefit is the fundamental need or wants that the customer satisfies when they buy the product. For example, the core benefit of a bank account could be for saving purposes or loans to businesses or individuals. 5
  7. 7. Product Levels (Kotler) 2. GENERIC PRODUCT The generic product is a basic version of the product made up of only those features necessary for it to function. In our bank example, this could be a Unique Account Number with a Check Book or an ATM. 6
  8. 8. Product Levels (Kotler) 3. EXPECTED PRODCUCT The expected product is the set of features that the customers expect when they buy the product. In our bank example, this could be access to a network of branches countrywide. 7
  9. 9. Product Levels (Kotler) 4. AUGMENTED PRODUCT The augmented product refers to any product variations, extra features, or services that help differentiate the product from its competitors. In our bank example this could be a versatile mobile banking application. 8
  10. 10. Product Levels (Kotler) 5. POTENTIAL PRODUCT The potential product includes all augmentations and transformations the product might undergo in the future. In simple language, this means that to continue to surprise and delight customers, the product must be augmented. 9
  11. 11. Summary • The Five Product Levels model provides a way to show the different levels of need that customers have for a product. • It can be useful in helping organizations understand their customers. From there, they can structure themselves to best serve those needs and wants. In this way, they can differentiate themselves from their competitors. 10

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