The genius responsible for turning Marketing into such a big academic discipline, Phillip Kotler said that a Product is much more than just a physical object or a thing that fulfills a need. A Product has multiple layers to it, each determined by the psychological state of the user. Just like a user's psychological state can be divided into needs, wants, and desires, so can a product be. And that's exactly what Kotler did.
3 Product Levels
1. Core Product
2. Actual Product
3. Augmented Product
Core Product
At the Core level, a product fulfills your most basic need. It's the first reason behind your purchase of that particular solution. Need something to drink water in? Then a water bottle or glass would be your core product. Need to check time? Then a simple watch that displays time would be your core product.
The psychological state associated with a Core product would be Need. You have a need, and a core product fulfills that need.
FitBit's Core Product Level
A FitBit's core function it to track your activity. It initially started with just the need for counting steps per day, and then the core product evolved a little more to count distance using GPS.
Actual Product
An actual product is associated with the product design and associated features. Whenever you buy something, you always look at its color variants, and all the extra bells and whistles that come with it. It can change depending upon the context. For example, if it's a food item, you will look at its flavors, texture etc. An actual product is the product you end up buying.
The psychological state associated with an Actual product would be Want. Once you need it fulfilled, you always want a few more things.
FitBit's Actual Product Level
FitBit might have originally started as a step and distance counter, but people desired their entire health to be tracked. Hence, it offered the following:
Product Design: Various colors and screen sizes
Heart rate monitor
In-app mindfulness resources
Sync with other apps
Food and Water logger
Community - Adding friends and others in your workout circle
Exercise and workout guides
These things are all more of wants than needs.
Augmented Product
At an augmented level, a product starts looking at points of differentiation as compared to other similar products. Things like customer service, payment terms, after sales service, extended warranty etc. come into play. But several other benefits and features also become a part of the augmented product, since they serve to improve the product to a huge degree.
The psychological state associated augmented product is that of desire - much more than just need or want.
FitBit's Augmented Product Level
FitBit's augmented product will involve all those things that differentiate it from other fitness trackers in the market. These may include:
Sleep tracker - Having a sleep tracker, and an accurate one at that, is not something that every fitness tracker can offer. However, a lot of FitBits are known for it.
EMI - Allowing flexible payment terms on the purchase, depending upon the customer's credit score.
Extended Warranty - On purchase of the extended warranty, you can get your entire product replaced for 2 years from the date of purchase. Even otherwise, you get a 1 year warranty.
A deep understanding of product levels can help product managers tremendously. There are some lessons to be learned from Kotler's product levels, especially -
Understand the customer's psyche: As the product is being designed, it should very clearly mirror the customers' psychological state. Is it serving a need, want, or desire? If so, how do you design something to fulfill each.
Keep evolving: A product should follow its natural path and keep evolving as time passed. If a product does not evolve, the competitors will kill it and eat it.