Last updated: 26th November 2016
|
|
What is Five Product Levels?
Five product levels is a model developed by Philip Kotler, a renowned professor from the Kellogg School of Management. For him, marketing is about how a product creates value for the consumers. A product is more than what it does to satisfy consumers' need or want. Consumers choose a particular product not because it fulfils its primary purpose but how it exceeds what the consumers expect.
Once a product does more than what consumers anticipate, then a brand will be able to form emotional bonds with the consumers. This makes you unique and last in the heart of the consumers. And whenever people think about a particular product category, they will think of you FIRST.
Once a product does more than what consumers anticipate, then a brand will be able to form emotional bonds with the consumers. This makes you unique and last in the heart of the consumers. And whenever people think about a particular product category, they will think of you FIRST.
Kotler identifies five levels of satisfaction that need and want has below:
Five Levels of Product
1. Core Benefit: the need or want that people have to satisfy by consuming a product or service
2. Generic Product: the basic features of a product or service that are necessary for it to achieve its core benefit
3. Expected Product: a set of attributes that consumers will expect when purchasing for a product or service
4. Augmented Product: other attributes, benefits, or related services that make the product unique and exceed consumers' expectation
5. Potential Product: any potential changes and benefits that a product might achieve in the future
Why is it important?
You can use this concept to keep yourself ahead of the competitors. It is important for any businesses that want to create values and become unique in the eyes of consumers. Businesses can learn how to differentiate itself by knowing what is the norm in the industry, how competitors offer their products and how you can distinguish yourself by offering something different.
Does it apply to all industries?
Yes. If you are running a business, then this concept is right for you. Every business has competitors. And this concept can help you to gain competitive advantage and keep you vigilant about what is happening in your industry (i.e. perfume, airline, restaurant, newspapers etc).
Common Misunderstanding
There are 3 issues that every marketers should be aware of when applying this concept to their businesses.
Firstly, people have different perception on what each tier should have. Consumers have different level of experiencing a product and might not know exactly what to expect. Some will have experience and knowledge of what the product/service category should have while some do not. For instance, if I visit a 5-stars hotel for the first time, then I would be surprised at the level of features being offer to me. On the other hands, experienced travellers might get upset if something is missing from what they expect a 5-stars hotel should have.
Secondly, not all features or attributes last in a particular tier forever. Customer expectation of a product changes over time from increased competition. Some attributes from generic level can move to expect produce and vice versa. For example, it has become almost mandatory for hotels to have wifi connection nowadays while it was considered augmented product to have in the past. Also, every time consumer experience a product or service, their expectations gradually increases over time.
Finally, many people have difficulty understanding the differences among the tiers. This is not particularly surprising, because many marketing lecturers and websites do not explain and provide clear examples properly. The common misunderstanding is the differences between Level 2, Level 3 and Level 4. We provide a real example to help you understand how each level differs.
Firstly, people have different perception on what each tier should have. Consumers have different level of experiencing a product and might not know exactly what to expect. Some will have experience and knowledge of what the product/service category should have while some do not. For instance, if I visit a 5-stars hotel for the first time, then I would be surprised at the level of features being offer to me. On the other hands, experienced travellers might get upset if something is missing from what they expect a 5-stars hotel should have.
Secondly, not all features or attributes last in a particular tier forever. Customer expectation of a product changes over time from increased competition. Some attributes from generic level can move to expect produce and vice versa. For example, it has become almost mandatory for hotels to have wifi connection nowadays while it was considered augmented product to have in the past. Also, every time consumer experience a product or service, their expectations gradually increases over time.
Finally, many people have difficulty understanding the differences among the tiers. This is not particularly surprising, because many marketing lecturers and websites do not explain and provide clear examples properly. The common misunderstanding is the differences between Level 2, Level 3 and Level 4. We provide a real example to help you understand how each level differs.
Example: Banyan Tree Hotels and Resorts
Source: Banyan Tree
|
In-Brief: Banyan Tree Hotels and Resorts is the world leading 5-stars hotel. Found in 1994 by travel enthusiast, Banyan Tree is now synonymous with niche Asian hospitality which offers romance sanctuary for travellers in 55 locations across 23 countries.
|
1. Core benefit: A room to sleep
Explanation: Travellers are travelling a long distance away from their homes. By doing so, they need a place to stay during their absence from home. Therefore, they need to book an accommodation to stay during their trip. When travellers arrive at Banyan Tree, they will expect the hotel to have a room ready for them to stay for the duration. If the hotel makes a mistake for not providing the ready room, then they risk failing to provide the core benefit of their service which is a room to sleep in.
Bad Example: In 2011, I booked a 4-stars hotel in London to stay for three nights (or four days). However, I discovered on the third day that the hotel only book me for just two nights. The hotel staff humbly apologised and scrambled to find another available room. It was a peak traveling season, so there were no rooms left. Fortunately, the hotel was able to find another room but at a different branch, and I had to transfer my belongings to the new hotel.
2. Generic product: bed, washroom, pillows, blanket, shower kit, working lights, towels, chairs, mirrors, wardrobe, working phone, hair dryer, shower coats, complimentary water bottles and more (Remember: this is a 5-stars hotel here!)
Explanation: The list above may sound hilarious, but they are necessary for most hotel room to fulfil its function. Banyan Tree is a luxury hotel, so it should have all the necessities and additional features to make guests feel like it's their home. All furnitures and utilities must be in a state of readiness. Customers cannot sleep in the room with a broken bed or be comfortable with a broken toilet.
Bad Example: A few years ago, I visited France with my family. We booked a 4-stars hotel via an online agency. I used the toilet and discovered that there was a broken toilet handle. This made it impossible to flush the toilet. I didn't pay money to fix the toilet myself and the utilities should be in a state of readiness for me to use without ease.
3. Expected level: clean bed sheet, decorated rooms, branded shower kit, satellite channels, hygiene towels, marbled bathtub and shower booth, decorated artworks, free high speed wifi, first aid service and more
Explanation: This is an upgrade version of the generic product level. It's basically how you make what you already have to become better relative to the nearest competitors. In this level, consumers expect value for money they paid for. Considering $480 per night at Banyan Tree, consumers expect a lavish room to sleep. These may include marble and gold decorations to create an impression of lavish experience.
Bad Example: I stayed at a 5-stars hotel in Shanghai last November. Those who travel to China will know that access to information and the Internet is restricted. I was not able to access loads of websites but I seek a refuge from a few working
4. Augmented level: individual villa, flower petals on bed, lit candles after room makeup, personal pool and jacuzzi, private nanny for kids, remember customers, Banyan tree museum, tour to scuba diving, chocolate on pillow, and more
Explanation: The augmented level is the game changer. This level requires Banyan Tree to offer something that is exclusive and cannot be easily imitated by the nearest competitors. Hotels will create a strong emotional value for the consumers for exceeding what they expect from the hotels.
Although the list above sounds simple, it requires a lot of attention to detail on how to deliver the ultimate customer experience.
Good Example: My brother and his family visit Paris every year. He always books one particular hotel near Madeleine. After two years, the hotel staffs remember the family and often have personal conversations. This creates a personal relationship and sense that this hotel (and its staffs) cares a lot about him and his family.
5. Potential product level: loyalty programme, send thanking letter to homes, preparing personal letters on bed before guests arrive at the room and more
Explanation: This level is about creating what new activities and features could add value to the customer experience. This level may be a bit complicated, because most activities have already been implemented. Marketers should explore creative idea on how to make consumers feel positive about the hotel.
Explanation: Travellers are travelling a long distance away from their homes. By doing so, they need a place to stay during their absence from home. Therefore, they need to book an accommodation to stay during their trip. When travellers arrive at Banyan Tree, they will expect the hotel to have a room ready for them to stay for the duration. If the hotel makes a mistake for not providing the ready room, then they risk failing to provide the core benefit of their service which is a room to sleep in.
Bad Example: In 2011, I booked a 4-stars hotel in London to stay for three nights (or four days). However, I discovered on the third day that the hotel only book me for just two nights. The hotel staff humbly apologised and scrambled to find another available room. It was a peak traveling season, so there were no rooms left. Fortunately, the hotel was able to find another room but at a different branch, and I had to transfer my belongings to the new hotel.
2. Generic product: bed, washroom, pillows, blanket, shower kit, working lights, towels, chairs, mirrors, wardrobe, working phone, hair dryer, shower coats, complimentary water bottles and more (Remember: this is a 5-stars hotel here!)
Explanation: The list above may sound hilarious, but they are necessary for most hotel room to fulfil its function. Banyan Tree is a luxury hotel, so it should have all the necessities and additional features to make guests feel like it's their home. All furnitures and utilities must be in a state of readiness. Customers cannot sleep in the room with a broken bed or be comfortable with a broken toilet.
Bad Example: A few years ago, I visited France with my family. We booked a 4-stars hotel via an online agency. I used the toilet and discovered that there was a broken toilet handle. This made it impossible to flush the toilet. I didn't pay money to fix the toilet myself and the utilities should be in a state of readiness for me to use without ease.
3. Expected level: clean bed sheet, decorated rooms, branded shower kit, satellite channels, hygiene towels, marbled bathtub and shower booth, decorated artworks, free high speed wifi, first aid service and more
Explanation: This is an upgrade version of the generic product level. It's basically how you make what you already have to become better relative to the nearest competitors. In this level, consumers expect value for money they paid for. Considering $480 per night at Banyan Tree, consumers expect a lavish room to sleep. These may include marble and gold decorations to create an impression of lavish experience.
Bad Example: I stayed at a 5-stars hotel in Shanghai last November. Those who travel to China will know that access to information and the Internet is restricted. I was not able to access loads of websites but I seek a refuge from a few working
4. Augmented level: individual villa, flower petals on bed, lit candles after room makeup, personal pool and jacuzzi, private nanny for kids, remember customers, Banyan tree museum, tour to scuba diving, chocolate on pillow, and more
Explanation: The augmented level is the game changer. This level requires Banyan Tree to offer something that is exclusive and cannot be easily imitated by the nearest competitors. Hotels will create a strong emotional value for the consumers for exceeding what they expect from the hotels.
Although the list above sounds simple, it requires a lot of attention to detail on how to deliver the ultimate customer experience.
Good Example: My brother and his family visit Paris every year. He always books one particular hotel near Madeleine. After two years, the hotel staffs remember the family and often have personal conversations. This creates a personal relationship and sense that this hotel (and its staffs) cares a lot about him and his family.
5. Potential product level: loyalty programme, send thanking letter to homes, preparing personal letters on bed before guests arrive at the room and more
Explanation: This level is about creating what new activities and features could add value to the customer experience. This level may be a bit complicated, because most activities have already been implemented. Marketers should explore creative idea on how to make consumers feel positive about the hotel.
Sources:
Banyan Tree (2016) The Banyan Tree Stories. Available at: http://www.banyantree.com/en/the-banyan-tree-stories
Evian (2016) An extraordinary saga of health and lifestyles. Available at: http://www.evian.com/en_gb/
Banyan Tree (2016) The Banyan Tree Stories. Available at: http://www.banyantree.com/en/the-banyan-tree-stories
Evian (2016) An extraordinary saga of health and lifestyles. Available at: http://www.evian.com/en_gb/
External Readings:
Baines, P. and Fill, C. (2014) Marketing. 3rd ed. Oxford: Oxford University Press
Keller, K. L. (2013) Strategic Brand Management: Building, Measuring, and Managing Brand Equity. 4th ed. London: Pearson.
Kotler, P. and Armstrong, G. (2013) Principles of Marketing. 6th European ed. London: Pearson.
Kotler, P. and Kevin, K. L. (2015) Marketing Management. 15th ed. London: Pearson
Available at:
www.amazon.com
www.kinokuniya.com
www.asiabooks.com
www.barnesandnoble.com
www.waterstones.com
Baines, P. and Fill, C. (2014) Marketing. 3rd ed. Oxford: Oxford University Press
Keller, K. L. (2013) Strategic Brand Management: Building, Measuring, and Managing Brand Equity. 4th ed. London: Pearson.
Kotler, P. and Armstrong, G. (2013) Principles of Marketing. 6th European ed. London: Pearson.
Kotler, P. and Kevin, K. L. (2015) Marketing Management. 15th ed. London: Pearson
Available at:
www.amazon.com
www.kinokuniya.com
www.asiabooks.com
www.barnesandnoble.com
www.waterstones.com
Copyright belongs to Bloomsbury Business Limited 2016
No parts of this publication can be copied and distributed on print or online medium without the consent of the company.
No parts of this publication can be copied and distributed on print or online medium without the consent of the company.