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five product levels

 
 
model's image

characteristics

author:
Kotler, Philip
country:
United States
period:
1969
type:
model
role:
consultant and manager
activity:
analyse and design
topic:
technology & operations and marketing & sales
abstr. level:
environment
perspective:
rational
status:
final
module:
classics I
comments:
1
 

advertising

 

description:

In the 1960's, the economist Philip Kotler changed the perception of marketing. He described what marketing is rather than what marketers do, thereby changing marketing from a departmental specialisation into a corporate wide doctrine. For Kotler, marketing was a 'social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others'.

 

For him, a product is more than physical. A product is anything that can be offered to a market for attention, acquisition, or use, or something that can satisfy a need or want. Therefore, a product can be a physical good, a service, a retail store, a person, an organisation, a place or even an idea. Products are the means to an end wherein the end is the satisfaction of customer needs or wants.

 

Kotler distinguished three components:

  • need: a lack of a basic requirement;
  • want: a specific requirement for products or services to match a need;
  • demand: a set of wants plus the desire and ability to pay for the exchange.

 

Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the actual use of a product matches the perceived value at the time of the purchase. A customer is satisfied only if the actual value is the same or exceeds the perceived value. Kotler defined five levels to a product:

 

1. Core Benefit

the fundamental need or want that consumers satisfy by consuming the product or service.

 

2. Generic Product

a version of the product containing only those attributes or characteristics absolutely necessary for it to function.

 

3. Expected Product

the set of attributes or characteristics that buyers normally expect and agree to when they purchase a product.

 

4. Augmented Product

inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its competitors.

 

5. Potential Product

all the augmentations and transformations a product might undergo in the future.

 

Kotler noted that much competition takes place at the Augmented Product level rather than at the Core Benefit level or, as Levitt put it: 'New competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.'

 

Kotler's model provides a tool to assess how the organisation and their customers view their relationship and which aspects create value.

assets:

.ppt file
five levels of marketing
  • ProvenModels
  • editor PM
  • version 0.1
  • 51 KB
 

pros:

The exchange between the organisation and the customer forms the model's heart, so the model can be used in both a commercial and non-commercial environment.

 

references:

Marketing Imagination
  • Theodore M. Levitt
  • 1983
  • Free Press
  • United States
  • ISBN 0029190908
 
Marketing Management
 
What we can learn from spaghetti sauce (video)
  • Malcolm Gladwell
  • 2004
  • TED
  • United States
 

technology & operations experts:

Shaw, Alan
  • 1 comments
  • manager
  • mindjet
  • Germany