[MUSIC] Hi, we continue with our product strategy definition of the marketing plan, and, in this case, let me tell you a little more about product levels. What are the product levels? Well, many times in a marketing plan, you find that you need to define specifically what is going to be the product that you're going to deliver. The idea is that we can identify levels of product. Let me try and explain these with a very simple graph. So we're going to define something that is called usually the basic product, okay? The basic product, okay? Then we may have something which is actually better with more features, more characteristics, and we call this the expected product. Okay, like this, expected. And then we might have something even more, having more features, which is usually called the augmented product. Augmented, okay. What is the basic product? Well, the basic product is basically the one that is delivering the basic need for this product of service. What is the expected product? Well, the expected product is the one that the customer is expected when we are actually trying to sell the product. What is augmented product? The augmented product is actually the product that is actually exceeding the expectations of the customer. So is when we're given something more, something unexpected, okay, something additional. Let me explain a very simple example. Lets say that we have a hotel. And what would be the basic problem? Well the basic problem probably is going to be just a bed, okay, and a place where you go to sleep and rest. What would be the expected product? Well the expected product depends on the problem category. Let's say that we are in a four start hotel. Okay we are in a four star hotel. We might expect of course a room, with a bathroom with some amenities in the bathroom. With a TV, with a WiFi probably today. And a that would be basically what we should be expecting in terms of product. What would be the augmented product? Well the augmented product is basically when we figure additional benefits. Okay what could be additional benefits? A spa, a business center, a minibar where you can give probably things were free, a swimming pool maybe, more bathroom amenities, better service. So, all these are additional benefits that we are into the product. Okay, so, what will we have to do in the marketing plan? Basically, define in what level are we going to compete. Are we going to be at the basic level, are we going to be at the expected level or are we going to be in the augmented level? And if we decide for something that we are going to be in the augmented level, what is going to be what was going to be our additional benefits okay. Let me give you some ideas about this. Remember everything that we are It's going to come with a cost, okay? So be careful because basically you're increasing your own production costs, okay? I know a thing that always happens in all the markets. What today's augmented in the future probably is going to be expected, okay? So the customer becomes actually accustomed to receive a certain level of product. Okay, and many times what today is augmented tomorrow probably is going to be expected. For example I don't know, air conditioning in a car. Some years ago used to be an extra, an additional thing, an augmented product. Today, it's probably expected. So it was augmented, now it's expected. So, actually, your production cost is increasing because you're adding new things that become expected. And one final idea about product level that is interesting because when you think about your product design, sometimes you want to do something different. And one thing that is happening in some industries is that some companies and some brands are actually coming down to the basic product again. Okay, why because there are opportunities there. Example of this, Ikea. Okay, why because Ikea has developed a product that is quite basic people will be willing to do trade offs and in exchange for a problem and price in a very attractive price they would be willing to buy a very basic product. For example a furniture where you have to assemble the product yourself, okay? Why? Because there is going to be people willing to go back to the basic product. Okay, so think about it because this not always have question of going to the augmented product but sometimes question of going down to the basic product and find opportunities there. Once again, we're going to test your knowledge about this in the assignment and in the assessment that you're going to do at the end of this course, you will be able to use the product level strategy and work with this analysis. Thank you. [MUSIC]
