2018-05-03 12:19:55BrandingEnglishIncorporate the three levels of a product to make your next product launch a resounding success. Learn about the core product, the actual...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/04/business-owner-reviews-fabric-for-use-in-product.jpghttps://quickbooks.intuit.com/ca/resources/branding/three-layers-product-leverage-best-goods/Leverage Three Layers of a Product to Develop the Best Goods

Leverage Three Layers of a Product to Develop the Best Goods

4 min read

Have you ever heard of the concept of the three levels of a product? When you’re working on new merchandise ideas, thinking about all three layers of your product — core, actual, and augmented — helps you move forward beyond the surface level and into more meaningful territories. It’s a great thought exercise to keep in mind as you develop new products or improve upon old ones, as identifying each level helps you really understand your products and how to make them as appealing as possible. After all, your goal is to get customers excited about your offerings, and incorporating all three layers into your product can help you figure out how to do just that.

The Core Product

The first level or your product is the core product, which is intangible. The core of your product is the value and/or service that it provides. For example, if you are planning on launching a smartphone, the core product isn’t the phone itself. The core product is the convenience of being able to communicate. Depending on the phone’s features, other core products could be the ability to access the internet from anywhere or the ability to carry multimedia files on the go.

A good starting point is to ask yourself what the customer is actually buying. Determine the thought process that led them to making the purchase. Say you’re working on launching a new bicycle. While buyers have different reasons to own a bike, most people get one to commute or exercise and mainly care about whether it’s convenient and affordable. You can focus on those benefits as the core products. The core product isn’t the bike itself — it’s the ability to get around the city, get a workout, or just cut down on gas expenses.

Sometimes the core product isn’t just a function. If a consumer buys a handbag, they usually just want to carry items in it — that’s a practical use. But if it’s a trendy handbag, the core product is looking fashionable, and practicality isn’t as important. For expensive designer handbags, meanwhile, the core product is the ability to flaunt status. Try to form a profile of your average customer, and figure out what they hope to achieve with whatever you’re selling. That’s the core product.

The Actual Product

As the name suggests, the actual product is the tangible product, as well as its design, packaging, colour, features, and so on. When creating the actual product, you use the core product to determine how to satisfy the customer’s desires from the first level. Using the handbag example, if the core product is being able to carry items conveniently, you want to design the handbag to be comfortable, with big pockets and a strong handle. On the other hand, if the core product is a status symbol, you may want to give it a flashy design with a prominent logo. As you can see, being aware of the core product helps you proceed in a more focused way with a specific goal in mind.

The Augmented Product

Finally, the augmented product is the intangible added value beyond the physical product itself. Using the smartphone example, the augmented product takes the shape of a warranty, trade-in policy, after-sale service, customer support, and possibly the phone service itself. These are the additions that give the smartphone value beyond just being an electronic device that satisfies the requirements of the first core level. In many cases, the augmented product is an add-on that costs extra. You can choose if you want the augmented product to be included in the overall cost or if you want customers to pay a premium.

Creating Three-Layer Products

Whether you’re designing a new product from scratch or revamping an old classic, you want your product to deliver benefits at all three levels. To create a new smartphone that hits all the levels, you could start by doing market research into what people want most from their phones. If the answer is fast internet access, you could make that a primary focus as you develop the device. Fast internet access is that first layer.

Now that you have that first layer in mind, you need to think about which features make it possible. To meet the demand for faster internet access, you want to ensure that your phone is compatible with the fastest possible internet network. This feature on the actual product fulfills the needs of the core product. Now, you can consider other first-level benefits, such as the ability to store large amounts of multimedia. Providing ample storage space is another feature to include on your actual product to reach that first-level goal.

Once you’ve hashed out the important first-level core products and made them possible with features on your actual product, you can finish by adding your third-level augmented products. For instance, you could consider the terms of your warranty, the cost of the phone’s service, and how long the buyer has to return the device if they’re unsatisfied with the actual product (second layer).

The three-layer approach isn’t the be-all and end-all of product development — it’s just one tool to help you on the road to your product launch. When you break down your product in this way, you can really hone in on the details that are naturally going to improve the chances of its success. There’s a whole lot to consider when it comes to creating or modifying a product, and dividing the product into three separate levels makes the process more easily digestible. Spend some time brainstorming, performing market research, and listening to feedback from your customers, and you should find that understanding the three levels of a product becomes second nature over time.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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