33. Product

Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy those needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information, and experiences.

Product is anything capable of satisfying human wants. A product is anything we can offer to a market for attention, acquisition, use, or consumption that might satisfy a need or want. Thus, a product may be a physical good like a cereal, tennis racquet, or automobile; or a service such as an airline, bank, or insurance company. 

A product could also be a retail outlet like a department store, specialty store, or supermarket; a person such as a political figure, social media celebrity, entertainer, or professional athlete; an organization like a nonprofit, trade organization, or arts group; or a place including a city, state, or country; or even an idea like a political or social cause.

We can define five levels of meaning for a product:

1. The core benefit level is the fundamental need or want that consumers satisfy by consuming
the product or service.

2. The generic product level is a basic version of the product containing only those attributes or characteristics absolutely necessary for its functioning but with no distinguishing features. This is essentially a stripped-down, no-frills version of the product that adequately performs
the product function.

3. The expected product level is a set of attributes or characteristics that buyers normally expect and agree to when they purchase a product.

4. The augmented product level includes additional product attributes, benefits, or related services
that distinguish the product from competitors.

5. The potential product level includes all the augmentations and transformations that a product might ultimately undergo in the future.

In many markets, most competition takes place at the product augmentation level, because most firms can successfully build satisfactory products at the expected product level. 

Harvard’s Ted Levitt argued that “the new competition is not between what companies produce in their factories but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.”