Most businesses now agree that a product is more than tangible physical goods; a product is more than a tube of toothpaste or a tin of beans. Most businesses talk not just the intangible element of goods but see intangible services and customer experiences as part of their product.
When you purchase a computer, you will likely receive a warranty and after-sales maintenance. Starbucks and Disney sell experiences not just coffee and films.
The Walt Disney Company describes itself as selling dreams and memories. Starbucks doesn’t just sell coffee it sells the Starbuck’s experience through the atmosphere and ambiance of its stores. Howard Shultz, the CEO of Starbucks talks of ‘people needing to slow down and smell the coffee’. He describes Starbuck’s stores as ‘the third place’, a halfway house between work and home.
By emphasising experience it reflects the fact that consumers are buying more than products and services. BMW summed it up in one advertisement when the German car manufacturer stated, “What you make people feel is just as important as what you make”.
The psychologist Abraham Maslow defined a hierarchy of human needs. He showed his hierarchy in a triangle. At the base of the triangle were physiological needs such as hunger and thirst; next come safety needs such as security and protection; then social needs such as love and belonging; then esteem needs, i.e. self esteem, recognition and status; and at the triangle’s peak, Self-actualisation needs i.e. how we actualize our chosen personality.
Maslow arranged needs in his hierarchy explaining that a person who is starving will look to find food, they may not care what brand or type of food they find. They will seek to satisfy their physiological need for food and overlook their need for recognition by eating a particular brand.
When planning a new product a business first needs to determine the core product. This is the actual item the customer buys and which satisfies the lower level needs of Maslow’s hierarchy. So Cadbury will design a bar of chocolate to satisfy hunger by determining its ingredients and the pack size. Some food manufacturers have come in for criticism for shrinking the size of the products they sell. Cadbury had to admit that they had made their cream eggs smaller as consumers felt their core needs were being ignored i.e. they wanted a bigger egg.
Next you must consider the core benefits of the actual product, such as design, quality, brand name, components and features. The CEO of Revlon once said “In the factory we make cosmetics, in the store we sell hope”. When you buy an Apple iPod, you are buying more than a tablet; you are buying entertainment, information, productivity and connectivity.
Finally you must consider the augmented product, otherwise referred to as the product surround. This includes services such as after-sales care, warranties, credit facilities and free product updates.
When purchasing products consumers buy a bundle of benefits to satisfy their needs. Some of these needs will be the base of Maslow’s triangle but other needs will involve esteem, social and Self Actualisation needs. Fashion brands, such as Nike, often focus their promotional activity on these higher level needs. When defining your products you need to identify the perceived values of your target customers and supply a product with tangible and intangible features which satisfy those perceived values.