Even a few decades ago, businesses were mainly about blindly selling products. Things have changed; marketers today believe that marketing is not only about promoting products and services, and the credit mainly goes to Kotler. It was Philip Kotler, a visionary economist who is also known as the “Father of Modern Marketing,” who changed the world’s perspective on the advertising/marketing game.
Kotler believes that an organization’s profit is linked directly to greater customer satisfaction – better fulfillment of needs and wants. Therefore, to market products effectively, the marketing focus should be shifted from price and distribution to value and benefits customers can get from a product or service.
Furthermore, Kotler came up with a model called ”Five product levels” for businesses to satisfy customer needs ranging from core or functionality needs to more abstract and emotional needs.
Let’s dive in deep with examples to understand what is Kotler’s Five Product Levels Model and why it’s important.
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What is Kotler’s Five Product Levels Model?
Philip Kotler’s Five Product Levels Model is about understanding an actual product at different levels to satisfy the needs and wants of the customers. The model ranges from the core, abstract, to emotional needs. It further explains that companies make products to satisfy consumer needs to promote greater well-being.
Kotler insisted that customers understand their basic needs but attach a bigger motive to feel good about owning the product. This means customers have a vague idea of their expectations from a product or service.
They will justify their spending by getting a higher perceived satisfaction from a purchase than the expected value. Here it’s important to note that customer satisfaction has three levels;
- Need: To fulfill a basic functionality. For example, a customer buys food items to live and secure their survival.
- Want: To satisfy a desire. For example, a customer buys an opera ticket to satisfy the desire for entertainment.
- Demand: A combination of want, desire, and ability. Customer wants to buy an LED screen to watch their favorite sports and has the means to satisfy this desire.
Marketers understand that it’s impossible to create a new product every time a customer moves up the ladder of want, need, and demand. This is where Kotler’s Five Product Levels Model comes into play.
It divides one product into five categories depending on where the customers stand on the hierarchy of needs ranging from
|Product Levels||Customer needs|
What are the Five Product Levels?
Marketers can influence customers to make an intentional purchase with the five product levels. Kotler’s model makes buyers’ journeys easy to understand. Once the companies know the expectations of their target audience, they can offer high perceived value.
Next are Kotler’s five product levels in detail, with examples to understand how customers become brand loyal by buying one product many times to satisfy their different needs.
Core benefit or core product is number one in order of importance amongst the five product levels as well as for the customer. This level ensures that the primary need of the customer is satisfied. The core benefit is the purpose behind every product’s creation. For example, restaurants are to fulfill the basic need to eat out. Secondly, car companies make cars as a means of transportation.
Generic products offer functionality but nothing more. For example, you want to take protein powder, not because of how it tastes or smells but because it’s a generic solution for a vital supplement.
Some generic products offer more functionality than others without many noticeable differences. For example, bottled water is the same in taste and look, but the purchase depends vaguely on customer preference. Other examples are mirrors, insurance, beds, etc.
The Expected products can be easily differentiated from the core and generic products. Customers have different expectations of value and satisfaction they get from a product. For example, a customer always expects a WIFI service to be fast and fully accessible.
At this level, a customer can become brand loyal if the expectations exceed the primary perceived value. For example, Nike shoes have high brand loyalty because customers expect them to deliver the best fit and comfort for every sporting level.
Also, different customers have different expectations. One person might wear Nike for comfort, and another might wear it as a fashion statement.
Augmented product level is backed by supporting services such as warranties, guarantees, additional services, after-sales services, etc. Some customers might only buy core products if they’re supported by intangible services or benefits.
For example, a customer might visit a departmental store because it has WIFI, elevators, and restrooms.
In the world of cut-throat competition, augmented products can provide customers peace of mind and distinguish companies in their business domain. For example, a customer may buy an air conditioner unit just because of one-year after-sales services offered by the company.
Customers will always expect more from their favorite brands. They would expect updates with better features delightful.
This product level also helps companies to assess and compare their products and services with the competition. Companies don’t want customers to use outdated products as they might lose their demand and use.
For example, iPhone always creates hype before releasing the updated and renewed version. No matter how big or small the innovation is, marketers can always make more sales by showing the continuous efforts of the company to invest and improve the quality of the products.
Why is the Kotler’s Model Important?
Kotler’s model is important to understand the target market’s needs, wants, and interests. The marketing department of an organization can help create efficient and effective products, advertisements, sales promotions, and other marketing campaigns only if they’re aware of how and whom to communicate with.
Key Benefits of Kotler’s Model
Now that you know why Kotler’s model is important, here are some more benefits of using it.
Customer Retention & Satisfaction
This is a no-brainer that when a company satisfies the needs and wants of the audience, it increases the trust and willingness of society to buy a specific product and service. Thanks to Kotler’s model, businesses can now come up with more of what their customers require. For example, a company might come up with more augmented products if that’s what their customer survey report asks them.
Diversified Product Portfolio
Business can diversify their product portfolio. For example, a company that makes products of core needs, such as domestic-use cars, can also make batteries as a generic product for vehicle industries. It can further expand to augmented, expected, and potential products across different industries. A diversified product portfolio also can minimize investment risk.
Brand Worth and Equity
Kotler’s five levels of the product model are customer focused. When businesses create products that are used and admired by customers creates trust and loyalty. Customers perceive such brands as valuable and frequently purchase them with a positive perception. It ultimately generates more sales, equity, and brand worth.
Kotler’s five-product level model can be summarized in three points:
- It can be applied to products, services, and experiences if it satisfies the needs, wants, and demands of the target markets.
- If businesses value their customers and keep their interests as top priorities, they will prosper and grow alongside social welfare.
- Strengthening the communication between consumers and businesses is essential to evolve with the changing wants and demands of society.