What is Kotler’s Five Product Levels Model?
Kotler’s 5 Product Levels model is used to develop new products or services or improve existing products or services and ensure they not only meet but exceed customers’ expectations.
The model developed by Philip Kotler highlights five ways to add value to a product or service. Each additional level adds increased value to your product or service and helps to differentiate it from your competitors.
The five product levels are:
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The core benefit – The most basic benefit the customer gets from the product or service. For example, when you buy payroll software, the core benefit is that employees will be paid on-time with the correct amount.
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The basic product – The basic features associated with the product or service that enable it to meet the core benefit. Payroll software needs to ensure employees are paid on-time and with the correct amount every month.
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The expected product – The set of attributes or features customers anticipate they will receive from buying the product or service. For example, buyers of payroll software might expect it to automatically calculate pay, leave, and pension deductions.
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The augmented product – The features that add value to the product or service (often intangible). They set the product or service apart from the competition. Payroll software could enable employees to access their pay slips online and make changes to their pension contributions.
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The potential product – The possible changes the product or service could go through in the future and the features which could be added to improve satisfaction or further differentiate from the competition. For example, a potential add-on to the payroll software could be a platform where employees can submit timesheets or request leave.
Use Cases For Kotler’s 5 Product Levels Model In B2B Research
Customer needs research – Kotler’s 5 Product Levels can be applied to customer needs research to help identify which elements of a product or service are considered table stakes and need to be included to meet basic customer needs versus which elements of a product or service add value for the customer and help to differentiate from the competition.
Product development research – When introducing new B2B products or services, Kotler’s 5 Product Levels can provide guidance when building the current product or service offering and thinking ahead to how the product or service could eventually evolve.
Value proposition research – Kotler’s 5 Product Levels can be included in Value Proposition research to ensure that the product or service offered meets and exceeds customer expectations. It can also be a useful tool to highlight which parts of the offering should be emphasized in communication about the product or service to the customer.
Complementary Frameworks to Kotler’s 5 Product Levels Model
Kotler’s 5 Product Levels Model can be combined with other popular frameworks to enhance customer needs research, product development research, and value proposition research.
KANO – A framework for analyzing which attributes of products or services are valued by customers. The framework focuses on the satisfaction of customers with an attribute and the degree to which the product or service delivers against what is expected.
Three Circles Framework – The framework consists of customer needs, company strengths and competitor strengths. Each of these areas interlink to reveal the points of parity in the market and the points of differentiation you or competitors may have. The Three Circles Framework helps to understand which customer needs are currently being met and by which companies and understand where a company currently sits in the market space against competitors.
Value Proposition Canvas – A framework to help ensure that a product or service is positioned around what the customer values and needs. The Value Proposition Canvas can be used when there is a need to refine an existing product or service offering or where a new offering is being developed from scratch.
SAVE Framework – An alternative to the market mix framework (4 Ps). While the 4 Ps focuses only on the product or service, the SAVE framework broadens the focus to include the needs of the customer. The framework focuses on; Solution, Access, Value and Education.
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