Level of Product – BMS Notes

A product is more than just a physical “thing,” according to economist and marketing expert Philip Kotler. A product fulfils the demands of the customer and has both a physical and an abstract value. According to Philip Kotler, this makes it possible to identify and build five different product tiers. Philip Kotler employs five product levels—the places or ways that a product is seen by the consumer—to construct its abstract value. These five product levels show how much people appreciate a certain item. The given value must match or exceed the anticipated value in order for the client to be pleased.

• Need: Absence of an essential component.
• Want: A clear specification for goods to meet a demand.
• Demand is the combination of a product’s desire and capacity to pay for it.

A product’s perceived worth will influence the decision made by customers. The degree to which a product’s perceived worth at the time of purchase and its actual usage coincide is known as satisfaction. A consumer is only happy when the perceived value is met or exceeded by the real value. Kotler classified items into five categories:

The following five product tiers are:

Main Advantage

the primary need or desire that customers use the item or service to fulfil. Take the need for processing digital photos.

Standard/Generic Product

a version of the product with only those features or qualities that are core to its operation. For instance, processing digital photos might be accomplished at a processing facility or on a low-end, generic desktop computer using free image processing software.

Predicted Outcome

The collection of features or qualities that consumers often accept and anticipate when making a purchase. For instance, the computer features a high-resolution, true colour screen and is designed to handle images quickly.

Enhanced Goods

the addition of new characteristics, advantages, features, or ancillary services that set the product apart from rivals. High-end image processing software, for instance, is pre-loaded onto the computer at no additional expense or at a much reduced incremental cost.

Prospective Good

This covers all potential future additions and changes that a product could experience. A company must strive to surprise and please consumers in the future by continuing to enhance goods if it wants to secure future client loyalty. For instance, regular updates with new and helpful features for image processing software are provided to the consumer.

The Five Product Levels’ Additional Worth

Every one of the five product tiers offers the buyer more value. Production firms have a better chance of standing out if they put up more effort across the board. At the augmented product level, rivals watch each other to imitate certain strategies, manoeuvres, and product designs. Customers find it more and more challenging to characterise a product’s uniqueness as a result. Production firms aim to outperform their competitors by emphasising elements that customers find valuable, such as innovative packaging, eye-catching ads, attentive customer care, and flexible payment options. Not only should we meet and beyond our clients’ expectations, but we also want to surprise them.

What are the advantages that the model offers?

Businesses may structure their product range to target different client categories using a tried-and-true manner according to Kotler’s Five Product Level model. This helps them to do organised analyses of the profitability of their customers’ and products’ sales and expenses. This model of product organisation helps businesses focus their sales processes around the needs of their customers and helps align other operational processes, such as design and engineering, procurement, production planning, costing and pricing, logistics, and sales and marketing, around the needs of their customers. Modeling and planning sales, manufacturing, and new product planning are all aided by grouping items into product families that correspond with client categories..