An augmented product refers to the additional benefits and features that go beyond the basic function of the product, enhancing its overall value to the customer. This concept is part of Philip Kotler’s “three levels of a product” model, which includes:
- Core Product: The fundamental benefit or service that the consumer is purchasing.
- Actual Product: The physical item or service with its tangible features (e.g., design, brand name, quality).
- Augmented Product: The extra services and perks that enhance the product, such as warranties, customer service, installation, or after-sales support.
These augmentations can help differentiate the product in competitive markets, build customer loyalty, and create a more satisfying experience for the consumer. For example, when purchasing a smartphone, the augmented product might include things like a free case, an extended warranty, or a year of free tech support.
In the context of innovation and strategy, the concept of the augmented product plays a crucial role in differentiation and value creation. Here’s how it fits into both innovation and strategic planning:
1. Innovation
- Differentiation Through Added Value: Companies can innovate by enhancing the augmented product with unique features that competitors don’t offer. For instance, Apple’s success is partly due to its ability to augment its products with services like iCloud, AppleCare, and seamless integration across devices, which goes beyond just selling a phone or computer.
- Enhancing Customer Experience: Innovating in the augmented layer allows companies to improve the customer journey. For example, Tesla augments its cars with over-the-air software updates, which enhance the user experience and keep the vehicles up-to-date, often making them more appealing than competitors that don’t offer such features.
- Product Ecosystems: Augmented products can be part of larger ecosystems, where multiple products and services are interlinked, creating a network effect. An example is the Amazon Prime subscription, which offers benefits across various services like free shipping, video streaming, and cloud storage, augmenting the basic product with a broad array of perks.
2. Strategy
- Competitive Advantage: Strategically augmenting a product can create a competitive advantage by offering additional benefits that are hard for competitors to replicate. For example, providing superior customer service, extended warranties, or loyalty programs adds value that distinguishes the company in a crowded market.
- Customer Retention and Loyalty: By focusing on augmenting the product, companies can foster stronger customer loyalty. Strategic moves like long-term warranties or exclusive membership services (e.g., VIP support) encourage repeat business and increase customer lifetime value.
- Market Segmentation: Augmented products can be tailored to different market segments, allowing companies to target specific needs. For instance, luxury car brands often include premium maintenance services and roadside assistance as part of the product package, appealing to high-end consumers who value convenience.
- Brand Perception: The augmented aspects of a product—such as customer service, user communities, or tech support—often shape how a brand is perceived in the market. A well-thought-out augmentation strategy can strengthen the brand image, making it synonymous with quality, reliability, or innovation.
Example:
A company selling smart home devices (core product) can differentiate itself by offering free installation, lifetime technical support, and seamless integration with other popular devices (augmented product). This strategy helps build a loyal customer base and positions the company as a market leader in smart home innovation.
