Kotler’s Five Product Levels Model Training Video
The Five Product Levels model was developed by economist Philip Kotler in the 1960s. His book, Marketing Management, was voted one of the 50 best business books of all time in the mid-1990s by the Financial Times. Kotler changed the way marketing was viewed by contending that it was not a singular department, separated from all the others, but that marketing as an activity was an organization-wide responsibility. He asserts that the definition of a product goes far beyond being a physical object or a service. He defines a product as anything that can meet a need or a want, and his Five Product Levels Model provides a way to show the different levels of need customers have for a product, such as: Core benefit, Generic Product, Expected Product, Augmented Product and Potential Product.
Description of Kotler’s Five Product Levels
The model considers that products are a means to an end to meet the various needs of customers, and asserts that there are three ways in which customers attach value to a product:
- Customer Need: the lack of a basic requirement.
- Customer Want: a specific requirement for a product or service to meet a need.
- Customer Demand: a set of wants plus the desire and ability to pay to have them satisfied.
Customers will choose a product based on their perceived value of it and are only satisfied if the product’s value to them meets or exceeds expectations. If the product’s actual value falls below expectations, they will be dissatisfied. An explanation of Kotler’s Five Levels follows below:
- Core benefit: The core benefit is the basic need or want that the customer satisfies when they buy the product. For example, a hotel provides a bed to sleep in when a person is away from home.
- Generic product: The generic product is a basic version of the product made up of only those features necessary for it to function. In this example, a hotel would provide not only a bed, but a few additional items such as sheets, towels and a bathroom.
- Expected Product: The expected product includes additional features that the customer might expect. In the hotel example, the sheets, towels and bathroom would be clean.
- Augmented Product: The augmented product refers to any product variations or extra features that might help differentiate the product from its competitors and make the brand a clearer choice amongst the competition. This could be additional amenities such as a helpful concierge service or tourist guides available to hotel guests.
- Potential Product: The potential product includes all augmentations and improvements the product might experience in the future. This means that to continue to surprise and delight customers the product must be constantly improved. In the hotel example, this could mean gifts, chocolates, or luxury bath products that will make the customer happy and choose that product over others in the future.
The greatest advantage of Kotler’s Five Product Levels Model is that it enables an organization to identify how to satisfy the needs and wants of the customer, in order to help differentiate itself from its competitors.
Praxie's Online Kotler’s Five Product Levels Tools & Templates
For strategy or product teams looking to bring their business or organization to the next level, the new online Kotler’s Five Product Levels Model template from Praxie is key to developing a strategic understanding of the different ways a product can be sold to a customer. Various types of market surveys and customer service interviews can be used to provide insights, data and additional support when using the Kotler’s Five Product Levels method. Most often, the model is presented in formats such as PowerPoint, Google Slides, or Keynote.
Get started with our Kotler’s Five Product Levels Model template.
How to use it:
- Begin at the bottom product level and list the Core Product Benefits that the product satisfies.
- Move up the levels and list specific attributes and strategies to create competitive differentiation.
- Create an action plan focused on creating and implementing your Five Product Levels Model.
Unlike most traditional Five Product Levels techniques, Praxie’s online Five Product Levels tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device. Many of our planning tools are part of our larger Business Strategy process since the first phases of strategy development include exploring emerging trends, the competitive landscape and customer needs. View video to learn more about the full strategy process: