A. Augmented Product Definition
An augmented product is a core product that is enhanced with additional features, services, or benefits designed to make it more attractive to consumers. This augmentation could be in the form of extended warranties, customer service, after-sales services, home delivery, installation service, free upgrades, or any other value-added feature. The term “augmented product” originates from Philip Kotler’s model in which he proposed three product levels: core, actual, and augmented. The concept aims to offer more value to customers, create differentiation in the marketplace, and build customer loyalty.
B. Augmented Product: The importance and relevance of the concept in today’s market
In today’s hyper-competitive business environment, simply offering a high-quality core product is often not enough. Consumers have come to expect and value the “extras” that come with the products they purchase. An augmented product provides companies with a strategic tool to stand out from competitors, offer more value to their customers, and enhance customer satisfaction and loyalty. With advancements in technology, businesses can now offer more innovative and valuable augmentations than ever before. Therefore, understanding and applying the concept of an augmented product is crucial for businesses aiming to secure a competitive edge in the modern market landscape.
The Three Levels of a Product
A. Core Product: Explanation and examples
The core product refers to the primary value or benefit that a product provides to its consumers. This level focuses on the fundamental need or desire that the product fulfills. For instance, the core product of a car is transportation – it allows people to travel from one place to another.
B. Actual Product: Detailed explanation and examples
The actual product represents the physical item or tangible elements that the consumer purchases. This can include the product’s features, design, brand name, quality, and packaging. For example, the actual product of a car includes its engine, body, tires, brand name, color, and more.
C. Augmented Product: Detailed explanation and examples
The augmented product refers to the additional elements or attributes that exceed customer expectations and differentiate the product from its competitors. These could be after-sales service, warranty, home delivery, product support, and other value-added features.
In the case of a car, augmented products could include a comprehensive warranty, free servicing for a certain period, roadside assistance, free insurance, or even a loaner car service during servicing or repairs. These additional services and benefits enhance the value of the car for the consumer, making it more than just a means of transportation, and therefore augment the product.
Understanding Augmented Product
A. In-depth explanation of Augmented Product
An augmented product is more than just the physical product or service offered to the consumer. It encompasses all the additional aspects that enhance the value of that core offering and exceed customer expectations. Augmentation could include anything from additional services, benefits, or features that differentiate the product or service from competitors. This concept is part of the broader marketing and business strategy, aiming to deliver more value to the consumer and establish a stronger relationship with them.
B. Components of an Augmented Product: Warranty, delivery and credit, after-sales service, and more.
The elements that augment a product can vary greatly depending on the nature of the product, the industry, and the specific needs and expectations of the target market. Here are some common components:
Warranty: Extended warranties provide consumers with peace of mind, assuring them that they can get their product repaired or replaced if it fails within a certain time frame.
Delivery and Credit: Free or expedited shipping, flexible payment options, and easy returns can significantly enhance the overall shopping experience.
After-Sales Service: This could include technical support, customer service, installation, maintenance, and repair services.
Additional Features or Services: This might include free software updates, complementary accessories, training or education, or even membership to an exclusive club or network.
C. How Augmented Product adds value for consumers
Augmented products add value by enhancing customer satisfaction and creating a stronger connection between the consumer and the brand. When a company goes above and beyond to provide additional services or benefits, it helps to differentiate their product from competitors, making it more attractive to consumers.
Moreover, the augmented aspects of a product often contribute to a sense of security and convenience, making the consumer’s life easier and more enjoyable. They can lead to increased customer loyalty and retention, as consumers often appreciate and become accustomed to these additional benefits and may choose to continue purchasing from brands that offer them.
10 Examples of Augmented Products
A. Apple: Extended warranties, iCloud storage, and customer support.
Apple’s products extend far beyond their innovative devices like the iPhone, MacBook, or iPad. They provide extended warranties that ensure customers they are investing in a long-lasting product. Additionally, they offer iCloud storage services that seamlessly integrate with their devices, enabling users to store data and access it across multiple Apple devices. Their customer support is renowned, with services such as in-store assistance at Apple Genius Bars and 24/7 online help, truly augmenting the overall user experience.
B. Amazon Prime: Faster shipping, video streaming, and exclusive deals.
Amazon revolutionized its basic online retail model with the introduction of Prime. This subscription service provides faster shipping options, sometimes as quick as same-day delivery for certain products. It also offers access to Amazon’s streaming platform, Prime Video, that hosts a variety of movies, TV shows, and Amazon Original content. Prime members also have access to exclusive deals during sales like Prime Day, further enhancing their shopping experience and augmenting the standard retail service.
C. Starbucks: Free Wi-Fi, Starbucks Rewards program, and mobile app features.
Starbucks, known worldwide for its coffee, also offers additional services that augment the customer experience. Free Wi-Fi is available in their outlets, allowing customers to work or relax while enjoying their coffee. The Starbucks Rewards program offers points for every purchase, which can be redeemed for drinks or food items. Their mobile app enhances the customer experience with features like order-ahead, digital payment, and finding the nearest store, making Starbucks more than just a coffee shop.
D. Tesla: Over-the-air updates, supercharging network, and comprehensive warranty.
Tesla not only sells electric vehicles but also provides a range of services that augment the customer experience. Over-the-air updates regularly enhance the car’s software, adding new features and improving existing ones. The Supercharger network allows Tesla owners to charge their vehicles quickly when traveling long distances. They also offer a comprehensive warranty that covers their vehicles for several years, ensuring peace of mind for their customers.
E. Zappos: Free shipping, 365-day return policy, and outstanding customer service.
Online shoe retailer Zappos is renowned for its emphasis on customer service. They offer free shipping for all their products, a 365-day return policy, and a 24/7 customer service hotline. These augmentations have helped Zappos stand out in the crowded online retail market.
F. Spotify Premium: Ad-free listening, offline mode, and higher quality audio.
Spotify offers a premium service where users can listen to music ad-free, download tracks for offline listening, and enjoy higher quality audio. These additional features augment the basic music streaming service and contribute to a more enjoyable listening experience.
G. Adobe Creative Cloud: Regular software updates, cloud storage, and extensive user support.
Adobe augments its Creative Cloud suite of applications with regular software updates, ensuring users always have access to the latest features and improvements. They also provide cloud storage for easy access to files across devices, and extensive user support including tutorials and forums.
H. American Express: Rewards program, travel insurance, and concierge service.
American Express enhances its credit card offering with a rewards program that allows members to earn points on their spending, which can be redeemed for various goods, services, or travel. Other augmentations include travel insurance and a concierge service that can assist with restaurant reservations, event tickets, and more.
I. Dyson: Long-term warranty, excellent customer service, and home repair services.
Dyson goes beyond selling vacuums and fans by providing a long-term warranty for its products, emphasizing their durability and quality. They also offer excellent customer service and home repair services, ensuring their customers get the most out of their Dyson products.
J. Ritz-Carlton: Loyalty program, personalized services, and concierge services.
Ritz-Carlton offers more than luxury accommodation. They enhance their guests’ experience through a loyalty program, offering rewards for frequent stays. They also provide personalized services to cater to their guests’ individual needs, and a concierge service that can arrange everything from dinner reservations to travel plans.
The Role of Augmented Product in Differentiating Brands
The concept of an “augmented product” refers to additional services or features that set a product apart from competitors. These extras, which may include exceptional customer service, excellent product support, a strong brand reputation, or access to complementary goods or services, are not inherently part of the product itself but enhance the overall value proposition to customers.
A. How companies use Augmented Product to set themselves apart
Improving Customer Experience: By offering additional services or benefits, companies can make their product more appealing and provide a more satisfying user experience. For instance, free delivery or installation, extended warranties, or 24/7 customer support can significantly enhance customer experience.
Building Brand Loyalty: Augmented product elements can create emotional connections with customers, leading to increased brand loyalty. For example, a brand that consistently provides high-quality customer service may gain a reputation that attracts and retains customers.
Justifying Price Premium: The additional features or services included in the augmented product can also justify a higher price, enabling companies to increase their profit margins.
B. Case Study: Brand Example of Augmented Product: Apple Inc
Apple Inc. provides a good example of using augmented products to differentiate its brand. Beyond the physical products like iPhones, iPads, and Macs, Apple offers a suite of augmented services that enhance the value of these products.
Apple Care: This extended warranty service provides repair and technical support that goes beyond the limited warranty that comes with Apple devices. This service enhances the value proposition for customers who want peace of mind regarding potential tech issues.
Apple Stores and Genius Bar: Apple’s retail locations provide a unique shopping experience with personalized service. The Genius Bar offers free technical support and advice, even if you’re just “thinking” about buying an Apple product.
iCloud: Apple’s cloud storage service, integrated with all their devices, allows customers to store data securely and access it from anywhere, adding convenience and ease of use to their products.
App Store: The App Store offers a vast ecosystem of apps, which greatly enhances the functionality of Apple’s devices. The availability and quality of apps are a key factor many users consider when choosing between Apple and other brands.
The Future of Augmented Products
A. Potential trends in product augmentation
Increasing Use of AI and Machine Learning: As businesses collect more and more data on their customers, AI and machine learning algorithms will play an increasingly important role in personalizing and enhancing the customer experience. From personalized product recommendations to AI-powered customer service chatbots, the potential applications are vast and varied.
Augmented Reality (AR) and Virtual Reality (VR): AR and VR are already being used in certain industries to augment products and services. For example, some furniture stores offer AR apps that allow customers to see how a piece of furniture would look in their home. As these technologies become more advanced and accessible, we can expect their use in product augmentation to become more widespread.
IoT-Enabled Services: The Internet of Things (IoT) has the potential to take product augmentation to a whole new level. For example, a refrigerator that can track your food inventory and automatically order groceries when you’re running low. Such IoT-enabled services could greatly enhance a wide variety of products.
Sustainability: As awareness of environmental issues grows, many consumers are seeking out sustainable products. Businesses can augment their products by providing sustainability-related services such as recycling programs, carbon offset schemes, and more.
Health and Wellness Features: As health and wellness become a bigger priority for many consumers, products could be augmented with related features and services. For example, food products could come with access to diet and nutrition advice, or fitness equipment could come with online workout classes.
Greater Integration: As consumers use an increasing number of connected devices and services, there will be greater demand for these to work seamlessly together. This could lead to products being augmented with the ability to integrate with other products and services, creating a more seamless and convenient user experience.
B. The influence of emerging technologies on Augmented Product (AI, AR/VR, IoT, etc.)
Technology has significantly amplified the concept of an augmented product. With the advent of the internet, AI, IoT, and more, businesses can now provide innovative features and services that add substantial value to their core offerings. Online customer service, regular software updates, digital loyalty programs, personalized recommendations based on user data, are just a few examples of how technology has revolutionized product augmentation. Furthermore, digital augmentations are scalable and can be delivered at relatively low cost, allowing businesses of all sizes to provide enhanced value to their customers.
C. Potential challenges and opportunities
Online Customer Service: Brands provide online chatbots for immediate responses to customer queries, enhancing the customer’s experience with quick, efficient service.
Personalized Recommendations: Platforms like Netflix and Spotify analyze user data to provide personalized content recommendations, thereby significantly enhancing the user experience.
Mobile Applications: Many businesses create mobile applications with unique features to augment their main service. For instance, banks provide apps that allow online transactions, digital statements, and notifications.
Software Updates: Companies like Microsoft offer regular software updates that not only fix bugs but often add new features, thereby continually augmenting their product.
Tips for Businesses
A. How businesses can develop effective augmented product strategies
Understand Your Customers: The first step in developing an augmented product strategy is to thoroughly understand your customers – their needs, wants, expectations, and behavior. This can be achieved through market research, customer feedback, and analysis of customer data.
Identify Potential Augmentations: Once you understand your customers, you can identify potential ways to augment your product that would add value for them. This could be additional services, features, or any other aspects that go beyond the core product.
Test and Refine: Any new augmentation should be tested with a small segment of your target market to gauge its effectiveness before it is fully launched. This allows you to refine and perfect the augmentation based on real customer feedback.
Continually Monitor and Adapt: Consumer needs and expectations change over time, and so should your augmented product strategy. Regularly monitoring customer feedback and market trends will allow you to adapt your strategy as needed.
B. The balance between actual product and augmented product
While augmentations can greatly enhance a product, it’s crucial not to neglect the actual product in the process. The core and actual product must always meet, and ideally exceed, customer expectations. An amazing customer service experience or a great warranty can’t make up for a poor-quality product. Therefore, businesses must strike a balance, ensuring their actual product is as strong as possible while also providing valuable augmentations.
C. Importance of consumer insight in developing augmented product strategies
Consumer insight is crucial in developing effective augmented product strategies. Understanding your customer’s needs, wants, and behaviors enables you to identify potential augmentations that will truly add value for them. Furthermore, consumer insight allows you to personalize and tailor your augmentations to individual customer segments, enhancing their effectiveness. Methods for gaining consumer insight include market research, customer surveys, analysis of customer data, and more
Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page