Three Levels of Product – Core Value, Actual Product, Augmented Product

If you think of a product, you most likely think of only one level of the three levels of product. If you think of a car, you probably think of the car: how it looks like, how it drives and so on. But a product is much more than what you think. We will investigate the three levels of product.

The three levels of product

The three levels of product: Core Value, Actual Product, Augmented Product
The three levels of product: Core Value, Actual Product, Augmented Product

Three levels of product can be identified. Each level adds more customer value. The first and most basic level is called the core customer value. The first one of the levels of product, the core customer value, answers the question: What is the buyer really buying? When a marketer designs a product, he should first think of the core problem. What does the consumer really seek? If you buy a car, the most basic core value you seek is transportation. For others, it might be status or glamour. If you buy a smartphone, the core customer value might be communication. Likewise, if you buy an iPad, you buy more than a mobile computer or a personal organiser. The core customer value you buy is freedom and on-the-go connectivity. A woman buying a lipstick seeks more than just a colourful cosmetic. In fact, she might seek hope. You see that already the first one of the three levels of product is much more than the product itself. Always ask yourself first when developing a product: What benefit does the customer really seek? What is the problem that needs to be solved?

The second one of the three levels of product is the actual product. Marketers should turn the core benefit, the core customer value they identified into an actual product. This involves developing product features, design, a quality level, a brand name and even a packaging. The smartphone you finally buy as well as the car are actual products. You buy the phone, the packaging, the functionality and so on.  All these factors at the second one of the levels of product relate to the core customer value. This reveals that the levels of product build up on each other. The smartphone’s name, parts, styling, features, packaging and other attributes all have been carefully combined to deliver the core customer value of staying connected.

Finally, the levels of product are completed with the augmented product. The augmented product rounds of the three levels of product, being built around the core value and the actual product. It simply offers additional consumer services and benefits. If you buy an iPad, you get more than the core customer value (e.g. communication), and also more than the actual product. These are only two levels of product. The augmented product you get is the complete solution to your connectivity problems as defined by the core customer value. This complete solution might take the form of a warranty, after-sale service, product support, instructions on how to use the device and so further.

As we have learned, a product is more than what you actually see when you buy it. Three levels of product are involved in any purchase. The levels of product include the core customer value, the actual product and the augmented product. What you buy is a complex bundle of benefits that aim to satisfy your needs. This also means that when marketers develop products, they first must identify the core customer value. What does the customer really need and want, what problem does he have? Then, they must design the actual product and in addition find ways to augment it in order to create customer value and the most satisfying experience.

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