Product Concept
Before diving into product strategies, it is essential to grasp the fundamental concept of a product. .
The Five Levels of a Product
A product provides value to customers across five levels, each adding layers of satisfaction and differentiation. These levels are:
- Core Benefit
- Basic Product
- Expected Product
- Augmented Product
- Potential Product
1. Core Benefit
- Definition: The fundamental service or benefit that the customer is truly buying.
- Example: In the case of a hotel stay, the core benefit is rest and sleep.
- The customer chooses a hotel because they need a place to sleep and rest while traveling, not just to book a room.
2. Basic Product
- Definition: The basic physical and tangible elements that deliver the core benefit to the consumer.
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Example: In a hotel, the core benefit (rest and sleep) is delivered through:
- A room
- A bed
- A bathroom
- A desk and closet
- These elements are necessary to fulfill the core benefit but are often insufficient by themselves.
3. Expected Product
- Definition: A set of attributes or conditions that customers expect to be provided along with the product. Without these, they will be dissatisfied.
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Example: In a hotel:
- Clean bed, pillow, and mattress
- Fresh towels
- Soap and toiletries
- A table lamp or fan
- Why it’s expected: Competitors typically provide these attributes, making them the standard. If these are not included, customers will likely choose another provider.
4. Augmented Product
- Definition: Features or attributes that exceed customer expectations, providing a unique selling proposition (USP) and differentiation.
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Example: In a hotel:
- An air-conditioned room (when others only provide fans)
- A TV with cable channels
- A mini-fridge, sofa set, or premium toiletries
- Augmented features make the customer happier by offering something additional.
5. Potential Product
- Definition: All possible future augmentations or transformations that a product may undergo to delight customers and create new value.
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Example: For a hotel:
- Smart TVs with OTT subscriptions
- Business-friendly features like video conferencing
- Advanced IoT integration, such as smart lighting or voice assistants
Positioning: Point of Parity (POP) vs. Point of Difference (POD)
The product levels align closely with positioning strategies:
- Point of Parity (POP): Attributes that are expected because all competitors offer them. These form the expected product.
- Point of Difference (POD): Features that exceed customer expectations, making the product stand out. These align with the augmented product.
Understanding Through Examples
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Hotel Scenario:
- Core Benefit: Rest and sleep.
- Basic Product: Room, bed, bathroom.
- Expected Product: Clean sheets, fresh towels, basic toiletries.
- Augmented Product: Smart TVs, luxury toiletries, mini-bars.
- Potential Product: AI-driven room personalization, VR entertainment systems.
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Customer-Specific Needs:
- Honeymoon Package: Focus on luxurious experiences and privacy.
- Religious Tourism: Basic amenities and proximity to pilgrimage sites.
- Adventure Tourism: Safety supplies and rugged facilities.
Adapting to the Market
The differentiation of a product depends on:
- Customer Needs: What the target customer values most.
- Competitor Offerings: What competitors are providing as expected or augmented features.
- Market Context: The type of market and its unique challenges or demands.
By continuously revisiting these factors, businesses can rediscover new opportunities to provide value and create sustainable differentiation.
6.1.2 Classification of Consumer Goods
Understanding the classification of consumer goods is crucial for developing effective strategies, as it helps to better understand customer behavior, shopping patterns, and marketing behavior. Consumer goods are typically classified into four categories: convenience goods, shopping goods, specialty goods, and unsought goods. This framework originates from Melvin T. Copeland’s 1923 HBR paper "Buying Habits to Marketing Methods". While it may seem like common sense, formalizing and utilizing this understanding strategically is an art.
1. Convenience Goods
These are goods that customers purchase frequently, immediately, and with minimum effort. Convenience goods can be further divided into three types:
a. Staples
These are regular purchase items essential for daily life.
- Examples: Rice, milk, bread.
- Buying Behavior: Routine problem-solving. Customers already know the product and brand, and purchase decisions are almost automatic.
b. Impulse Goods
These are unplanned purchases made on the spot.
- Examples: Chocolates at checkout counters, magazines.
- Buying Behavior: Decisions are driven by immediate attraction or a whim.
c. Emergency Goods
These are goods bought out of necessity during urgent situations.
- Examples: Umbrellas during unexpected rain, band-aids for cuts.
- Buying Behavior: Immediate need overrides other considerations like brand or price.
Strategic Implications:
- Availability is Key: Ensure widespread distribution.
- Fixed Price Point: Keep pricing consistent and competitive.
- Economies of Scale: Profit depends on high volume sales.
2. Shopping Goods
Shopping goods are items for which consumers compare prices, quality, and features before making a purchase. These goods typically involve extended or limited problem-solving during the decision-making process.
Characteristics:
- Significant price, quality, or style variations.
- Customers invest time and effort in evaluating alternatives.
- Includes both functional and aesthetic considerations.
Examples:
- Clothing
- Home appliances (e.g., washing machines)
- Furniture
Strategic Implications:
- Brand Differentiation: Highlight unique features, quality, and design.
- Comprehensive Information: Provide detailed specifications and comparisons.
- Customer Support: Offer assistance during the evaluation process.
3. Specialty Goods
These are products with unique characteristics or strong brand identification for which buyers are willing to make special efforts. Consumers display brand loyalty and are often willing to wait if the product is not readily available.
Characteristics:
- Customers do not consider substitutes.
- High involvement and emotional attachment to the product.
- Often associated with luxury or niche markets.
Examples:
- Luxury cars (e.g., Tesla, Ferrari)
- Designer suits or shoes
- Niche products like sports gear (e.g., football studs)
Strategic Implications:
- Focus on Exclusivity: Build brand identity and uniqueness.
- Customer Experience: Enhance the buying experience with premium services.
- Limited Availability: Maintain exclusivity to preserve demand.
4. Unsought Goods
Unsought goods are items that customers do not actively seek out or think about purchasing. They often require aggressive marketing or personal selling to convince buyers of their necessity.
Characteristics:
- Often unknown to consumers or not on their priority list.
- Require significant promotion and awareness-building.
- Purchases are usually initiated by external triggers.
Examples:
- Vaccines (e.g., during COVID-19)
- Life insurance
- Financial instruments (e.g., mutual funds, years ago)
- Encyclopedias (prior to the internet)
Strategic Implications:
- Awareness Campaigns: Educate consumers about the product's importance.
- Proactive Selling: Leverage sales teams to reach potential buyers.
- Long-term Engagement: Build trust and relevance over time.
Conclusion
Understanding these four categories—convenience, shopping, specialty, and unsought goods—provides valuable insights into consumer behavior and helps businesses tailor their marketing strategies. Each category demands a different approach:
- Convenience goods prioritize availability and pricing.
- Shopping goods emphasize differentiation and information.
- Specialty goods focus on exclusivity and loyalty.
- Unsought goods require aggressive awareness-building and selling.
By recognizing the unique characteristics and behaviors associated with each type of product, marketers can develop targeted strategies to meet consumer needs effectively.
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