BEYOND CUSTOMER EXPECTATIONS: THE 5 LAYERS OF PRODUCT
Anyone who studied Strategic Management or Strategic Marketing in university, or during their MBA, might remember many of the big blue bricks that were the Kotler text books. Philip Kotler, the strategic marketing guru, was a very clever man, but he wrote textbooks that must have required 10% of the Amazon jungle to be felled for every book published. Seriously, they were huge. However, within those (many) pages were models we still use today to frame strategic discussion.
Am I Relevant?
During a recent Q&A session at an event, I was asked how to keep your product relevant to emerging consumer needs, and his simple 5-layer product model popped back into my head (24 years after discussing it in Marketing Strategy 101 on a damp Thursday in university, which is either really impressive recall or the sign of a good framework).
His model was a simple 5 layered model of concentric circles, one where he proposed that all products had 5 basic levels – They were the Core, Generic, Expected, Augmented and Potential. Stick with me and we will go through them, and then you can apply them to your brand or business (think of it as a mini MBA?).
The CORE of the product was the fundamental need or benefit it fulfilled. Regardless of the other attributes that came with the product after, if it didn’t satisfy the core benefit, then any ‘extras’ were pointless. Think of a car. The core benefit here is the idea that it will get you from A to B, that its engine will move it (using pistons and axles and wheels). Ultimately the core product is the mobility aspect. No matter how much technology and additional elements you tack on, if the car won’t actually move or won’t do so on a consistent basis, then it doesn’t meet the core need and so falls at the first hurdle. For coffee, the core product is your basic bag of beans, for example.
The next level out was the GENERIC level. This was where the benefit was delivered but there was no real differentiation between all the available products. Without any additional features or benefits, all the products are the same and as such, competition is usually only driven by price. This is not a space any business or brand wants to end up. Commodity land. When a consumer sees no difference in branded still mineral water and private label water, then they will buy the cheaper variant. Or toilet tissue. Or car insurance. Or mobile phone payment plans. They will view it as a commodity and buy the cheapest. Thinking back to your bag of coffee beans, grinding them for me adds a bit more value but it is still a generic product.
EXPECTED is one layer out again. The Expected becomes the extras that are built on to add further value, an attempt to move out of that generic/commodity space so we start to see some differentiation. These will change over time, as consumers and the markets come to ‘expect’ them as standard (and thus they may even slip back into CORE expectations). When hotels first offered WiFi it was of additional value (so much so, they charged for it). Now it is simply expected. The guy next to me on this British Airways flight has just been told if he wants to use WiFi on board it will cost him £5. He (correctly, having paid about £600 for his ticket in Business Class) expects it for free. What was once in the added-value box is now a base expectation. With our coffee example, at this stage we are probably sitting in a simple café where someone has poured us a filtered coffee. I’ll pay more for this than a bag of beans (ground or not), as there is a further level of service (the café environment and the fact I didn’t have to brew it myself) but it’s hardly amazing added-value.
The outer layer of Kotler’s model is the AUGMENTED. This is where true differentiation and competition lie, with providers trying to add additional value in terms of product or service attributes. The attributes that truly differentiate and make us different, that make customers wonder and desire our product. But again, over time what starts out as Augmented then becomes Expected.
Returning to our car example, my father remembers buying his first car in the 1960s and being offered the choice of a radio or in-car heating. Both were optional extras, augmented levels of product. You could choose one. Today you would expect any car to have heating, AC and a basic sound system. ABS and Airbags were new features in the 1980s and 1990s but all standard today. Today’s Augmented product attributes are more likely to be in car WiFi and self-driving capabilities, and even these will eventually slip into the Expected too, given time. Starbucks challenged the nature of what was ‘Expected’ from a coffee shop, but have now perhaps become too mass-market and have slipped back into the expected.
So why the revisiting to Marketing 101 product theory? What’s all this talk about Core, Expected and Augmented about? Well just like the coffee beans and the added value through the experiential economy (Starbucks after all is all about the barista and café experience), we have an opportunity to now use brand and customer experience as an augmented level of product for our business.
The product itself is one thing, but the experience I have while buying, consuming or interacting with it becomes another. Interestingly, the brand has perhaps become a conduit for the experiences I wish to have and share. Perhaps consumers will buy more from brands that offer experiences more than those that don’t. If we start to see our brands and businesses as selling an experience, and that the product with which we deliver the experience is just that, a conduit, we might start to see more traction with our target market.
Below is a picture of a ‘catch your own sushi’ restaurant in Tokyo. You catch your fish, throw it to the chef you goes ‘chop, chop, chop’ and your sushi appears in front of you!
The core here I guess is the food, but that’s not really why you go here. You go for the experience, the story, the video and pictures you take. This is all about augmenting value through experience.
Focusing on the ‘core’ has you providing a product or service. Switching the focus to the Augmented is about providing an experience. Keeping that in mind should allow us to add more value to this Blue Dot Consumer and differentiate ourselves beyond the competition.
Ask yourself what the core/expected attributes of your product or service provision is. Make sure they are rock solid. But once they are, put all your effort into using experiential elements to augment and delight consumers. It’s a model that has lasted decades because it works. Today’s augmented becomes tomorrows expected. Keep augmenting added-value or you will be left behind.
Rather amusingly a fuse went in my father’s car last week. I know this as I had borrowed it and his radio wasn’t working. “Yeah. The heater fuse went so I swapped the radio one in until I go to the Motor Factors to get a new fuse” was his reply. Seems like 50 years later he is still choosing between a radio and heating!
Ken Hughes is now acknowledged as being one of the world’s leading authorities on consumer and shopper behavior, blending his understanding of consumer & cyber psychology, digital anthropology, behavioral economics and retail futurology to explore the needs of the new consumer and predict the changes to come.
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