Kotler states five product levels, the core benefit, the basic product, the expected product, the augmented product and the potential product.
“Each level adds more customer value, and the five constitute a customer value hierarchy. The most fundamental level is the core benefit: the fundamental service or benefit that the customer is really buying. A hotel guest is buying ‘rest and sleep.’ The purchaser of a drill is buying ‘holes.’ Marketers must see themselves as benefit providers.
At the second level the marketer has to turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser, and closet.
At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product. Hotel guests expect a clean bed, fresh towels, working lamps, and a relative degree of quiet. Because most hotels can meet this minimum expectation, the traveler normally will settle for whichever is most convenient or least expensive.
At the fourth level, the marketer prepares an augmented product that exceeds customer expectation. A hotel can include a remote-control television set, fresh flowers, rapid check-in, express checkout, and fine dining and room service…”
“Today’s competition essentially takes place at the product-augmentation level…Product augmentation leads the marketer to look at the user’s total consumption system: the way the user performs the tasks of getting, using, fixing, and disposing of the product. According to Levitt:
The new competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value…
At the fifth level stands the potential product, which encompasses all the possible augmentations and transformations the product might undergo in the future. ..
Successful companies add benefits to their offering that not only satisfy customers, but also surprise and delight them. Delighting is a matter of exceeding expectations.”
Source: Kotler, Philip: Marketing Management. The Millenium Edition. Prentice Hall. New Jersey. p 394-395