What is an Augmented Product?

Core, Actual, and Augmented Products

To understand what an augmented product is, it’s helpful to break down the different levels of a product:

• Core Product: This is the basic benefit or solution that the product offers. For example, in finance, a core product could be a savings account.

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• Actual Product: This includes the tangible aspects of the product along with its packaging and branding. For a savings account, this would be the account itself along with any associated debit cards or online banking services.

• Augmented Product: This is where additional services and benefits are added to enhance the customer experience. For a savings account, this could include free financial planning sessions, higher interest rates for loyal customers, or access to exclusive investment opportunities.

Examples of Augmented Products in Finance

In the financial sector, augmented products are becoming increasingly common as companies strive to offer more comprehensive solutions:

• Extended Warranties: Offering extended warranties on investment products can provide customers with peace of mind and protect their investments against unforeseen risks.

• Free Installation Services: Providing free installation services for financial software or platforms can streamline the onboarding process for customers.

• Additional Content or Tools: Offering additional content such as market analysis reports, webinars on investment strategies, or tools like budgeting apps can significantly enhance the value of the core product.

Benefits of Augmented Products

Enhanced Customer Experience

Augmented products enrich the customer experience in several ways:

• Personalized Solutions: By offering tailored services and features, businesses can address specific customer needs more effectively. For instance, personalized investment advice based on a customer’s financial goals and risk tolerance.

• Streamlined Processes: Additional services like free installation or setup can make it easier for customers to use the product. This reduces friction and improves overall satisfaction.

• Seamless Interactions: Augmented products often include features that facilitate smoother interactions between the customer and the company. For example, 24/7 customer support or mobile apps that allow easy access to account information.

Increased Competitive Advantage

In a crowded market, augmented products can be a game-changer:

• Unique Combinations: By bundling unique combinations of products and services, companies can differentiate themselves from competitors. For example, a bank offering a savings account with free financial planning sessions stands out from one that only offers a basic savings account.

• Capturing Consumer Attention: Augmented products capture consumer attention by promising more than just the basic product. This can lead to higher engagement rates and increased brand visibility.

Improved Brand Loyalty

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Delivering value-added experiences through augmented products fosters brand loyalty:

• Exceeding Customer Expectations: When companies go above and beyond what is expected by offering additional benefits, customers are more likely to feel satisfied and loyal.

• Higher Satisfaction and Advocacy: Satisfied customers are more likely to advocate for the brand, leading to positive word-of-mouth marketing and higher retention rates.

Strategies for Implementing Augmented Products

Identifying Customer Needs

Understanding consumer expectations is crucial for developing effective augmented products:

• Consumer Feedback: Gathering feedback through surveys, focus groups, or social media can help identify what additional services or features customers would find valuable.

• Market Research: Conducting market research to understand industry trends and competitor offerings can also guide the development of augmented products.

Collaborations and Partnerships

Partnering with complementary businesses can offer bundled solutions that provide added value:

• Bundled Services: Collaborating with other service providers to offer bundled services (e.g., a bank partnering with an insurance company) can create comprehensive packages that appeal to customers.

• Cross-Promotions: Cross-promoting each other’s services can expand the reach of both companies while enhancing the overall value proposition.

Technological Investments

Investing in technology is essential for overcoming limitations and delivering sophisticated augmented products:

• Research and Development: Continuously investing in R&D ensures that the company stays ahead in terms of technological advancements.

• Strategic Partnerships: Partnering with tech firms or startups can bring innovative solutions into play.

• Talent Acquisition: Hiring skilled professionals in technology and innovation helps in developing cutting-edge augmented products.

Challenges and Solutions

Technological Limitations

While technology is a key enabler of augmented products, it also poses challenges:

• Investments in Cutting-Edge Technologies: Companies need to invest in the latest technologies to overcome limitations. This could involve adopting AI, blockchain, or other emerging technologies.

• Strategic Partnerships: Forming partnerships with tech-savvy companies can help bridge technological gaps.

Cost Management

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Developing and deploying augmented offerings come with costs that need careful management:

• Cost-Benefit Analyses: Conducting thorough cost-benefit analyses helps in understanding whether the additional costs are justified by the potential benefits.

• Scalable Technologies: Using scalable technologies ensures that as the business grows, the costs do not become prohibitively high.

Case Studies and Examples

Financial Sector Examples

Several financial institutions have successfully implemented augmented products:

• Augmented Reality in Banking: Some banks are using augmented reality (AR) to enhance customer service. For example, AR can be used to provide virtual tours of branches or explain complex financial concepts interactively.

• Virtual Trading Platforms: Online trading platforms that offer virtual trading environments where users can practice trading without risking real money are another example of an augmented product.

• Customer Service Enhancements: Banks offering 24/7 customer support through chatbots or mobile apps are enhancing their core banking services.

Other Industry Examples

Examples from other industries can also be applied to finance:

• Free Services: Companies offering free services like free shipping or free trials can be adapted in finance by offering free consultations or trial periods for investment products.

• Extended Warranties: Extended warranties on electronic devices can be compared to extended warranties on investment products in finance.

• Additional Content: Providing additional content such as e-books, webinars, or online courses is common in many industries and can be applied similarly in finance.

Additional Resources or Further Reading

For those interested in delving deeper into the topic of augmented products and their application in various industries including finance, here are some additional resources:

• [Book] “Marketing Management” by Philip Kotler

• [Article] “The Role of Augmented Products in Modern Marketing”

• [Website] Harvard Business Review articles on innovation and customer experience

These resources provide further insights into how businesses can leverage augmented products to achieve competitive advantage and drive customer satisfaction.

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