Q.
a) Explain the five (5) product levels within the customer value hierarchy. (10 marks)
b) Discuss the various stages of new product development by using a residential property development as an example. (15 marks)
(25 marks, 2019 Q3)
A.
a) Product levels (Customer Value Hierarchy) - Philip Kotler.
Levels of Product or Service, also known as the Customer-Value Hierarchy which mean that with the increase of the level, the value increases related to the product of our interest. Philip Kotler proposed five product levels:
- Core Benefit, the very basics for which a product is purchased. It is the main functionality of a product without which the product has no value. For example, if it doesn’t show the time properly, the watch has no value. If we cannot call, the phone has no value. Without proper functioning of this level, anything you add beyond this level doesn’t give you any more value.
- Basic Product, the very first look of the product. It is mainly the physical appearance of the product. For example, a wristwatch has the dial and leather; the phone has the bar shape, folding shape, or slider shape body, etc.
- Expected Product, the very good features that are expected in a product. Adjectives modify the features of a Noun or Pronoun. Expected Product modifies the Basic Product. For example, the customer expects that the watch should show the right time and will last longer; the phone should work properly and has a good built-in quality. The greater a company meets the expected product level, the sustainable brand a company can create.
- Augmented Product, the very amazing features that exceed the customer expectation, totally. Only the leading brands in an industry can do this. For example, Apple or Samsung brings smartwatches or completely new features on the phone that any brand couldn’t bring earlier. These augmented products are Flagships most of the time. The company invests huge bucks in R&D for maintaining the augmented product level.
- Potential Product, the very futuristic concept of an existing product. We better don’t give any examples here. Examples might seem weird here but these features can come to reality someday.
Using hotel as an example:
- Core Benefit – rest and sleep
- Basic Product – a bed, bathroom, towels, desk, dresser, and closet
- Expected Product – a clean bed, fresh towels, working lamps, and a relative degree of quiet
- Augmented Product – child’s playthings, small garden, bookshelf, etc. in the room
- Potential Product – mobile app lock-unlock, ordering, or room service system, etc.
[Using residential house as an example:
- Core Benefit - shelter and home
- Basic Product - bedroom, kitchen, living room, car park.
- Expected Product - safety, clean, storage of food.
- Augmented Product - garden, food tree, jogging and exercise.
- Potential Product - club house, guard house.]
Ref:
[X] Own account.
Sanjidul Anwar, 5 Levels of Product (The Customer-Value Hierarchy) – Want to Learn with Examples? Available at,
5 Levels of Product (The Customer-Value Hierarchy) – Want to Learn with Examples?
b) New product development by using a residential property development.
Ref:
Earlier post.