Alot of effort is required to effectively promote a product or service so its really important that you understand what you are actually selling. Only when you understand the core reason people are buying your product or service that you can use marketing technique to increase demand. This post is highlighting the importance of understanding your core product for small business, because small business needs to maximise its investment in limited marketing budgets. This concept is best illustrated with a simple example below.
Why does a customer by a drill from a hardware store? Not because they want to own a drill , it is because they need a hole in the wall.
Generally a product or service can be broken into 3 levels,
Three levels of product or service
- Core benefits or service - this is what the customer is actually buying. Its the problem solved or benefits the customer gets when they buy the actual product or service. In the example above its the ability to create a hole.
- Actual product or service – is generally the product or service purchased by the consumer. In the example above its the actual drill purchased from the hardware.
- Augmented product - these are customer valued extras which are designed to add value to the customer. Examples of augmented products include warranties, customer services, trading terms, delivery, installation etc.
Most small businesses understand actual and augmented product but take the core benefit for granted. This results in marketing effort concentrating on the benefits of the actual product rather than addressing the reason people are buying the product.
Customers tend to see products or services as complex bundles of benefits.
Why should you even care?
Its important to understand all this because combined it is your value proposition to customer. Most competition these days is around the augmented products and services it is where companies create a competitive advantage.
Also it is easier to increase demand for a product or services if you understand the core benefit your customers expect to get from buying your product or services. Marketing should be targeting the core benefits and augmented products because these are where customers will decide how to spend their hard earned.
Case Study: Style Communications
The following diagram is used internally as a way to clearly communicate to our staff the business we are in and how we add value to our customers.
Style value proposition
As this diagram shows the products we sell are in the ring surrounding our core benefit which is solving our customers communication needs. Print related materials is all about communicating and we are experts in this area. We believe our competitive advantage comes from the outer circle because this is how we add more value to our customers than the competition.
Its clear to us where we need to
- Spend our marketing budget
- Develop our staff
- Invest in our product
- Why our customers choose us over our competitors.
At Style we understand our products and why you need them. We can also help you understand your product or services and develop a unique value proposition for your customers.
