September 22, 2014

Three Levels of a product

The concept of “three levels of a product” actually comes in play when you are finalizing a product for your business or when you want to analyze a product. Just like any business, a product too has its hierarchy. A product can be divided into three levels which are a series of different features and benefits which helps in its segmentation targeting and positioning. Thus the three levels of a product are the ones which help to define the product in a better manner. These three levels are

Levels of  a productImage courtesy – marketingteacher.com

1) Core product

2) Actual product

3) Augmented product

The terms “Core product” and “Actual product” have a very slight differentiation between them but it is vital that marketers understand this difference. Only by defining your core product clearly, you can achieve marketing excellence. Core product is also known as benefits and is general intangible in nature. Lets take an example.

Supposing you are planning on launching your own car manufacturing unit. What would be your core product? Would it be the car itself? NO. The core product would be convenience to your customers. Your customers can also travel by bus or taxi. But they prefer cars because of convenience as well several times because of status symbol. Thus the core product in case of Tata cars will be convenience and value for money whereas in case of BMW it will be Status symbol.

Thus the concept of core product is simple. The Actual product is the one which is manufactured after a decision has been taken on what your core product is going to be. Thus, from the above example, if your core product is a status symbol, your actual product will be a very high quality product with high pricing. On the other hand if the product is a convenience product, the production would be on the basis of Value for money. Actual products are quantifiable in nature and have properties like color, branding, quality etc.

The Augmented product, as the name suggests, arise by themselves and are by products of the core and actual products. These might be complete products within themselves. Again taking the above example, if you are manufacturing a car, it needs regular servicing, warranty etc. Thus these become tertiary products or augmented products. There are business which are dedicated completely in providing augmented products such as service centers, AMC centers etc.

Also remember that the three levels of product are not only useful for Tangible products but for Intangible product like services as well. For example –  If an IT company makes a software, the core product could be better operations and management for their customers. The actual product may be dedicated to multiple facets of the organization for which the software needs to be programmed, and the augmented product may be the maintenance of this software and regular up gradation. Thus even the service products have their own three levels.

These three levels of a product play a vital part in product management and are also important while deciding the marketing mix of a company. This is mainly because, if there was an augmented product attached to the actual product, then the promotions, placing and pricing of even these augmented products needs to be decided. Thus product decisions are generally the primary decisions of the marketing mix.

Hitesh Bhasin

Hitesh Bhasin

Admin at Marketing91
I love writing about marketing and advertising. How did you like the post? Kindly send me you suggestions and post ideas via Feedback or you can also Follow us on Email and get daily marketing updates.
Hitesh Bhasin
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I love writing about marketing and advertising. How did you like the post? Kindly send me you suggestions and post ideas via Feedback or you can also Follow us on Email and get daily marketing updates.

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  1. Product Differentiation says:

    [...] discussed in a previous article, a product is made up of three levels. The Core product, the actual product and the augmented product. Product differentiation deals with [...]