What is an augmented product?

Companies grow their products to increase revenue and can create additional revenue streams in the process.

An augmented product is a product with additional features and services that differentiate it from similar competitors. Companies grow their products to increase revenue and may create additional revenue streams in the process depending on the types of products and services they offer. Consumers can preferentially select an expanded product when given a choice, which makes manufacturers continue to add innovations to their products to capture and hold consumer attention.

The main product might be something like a computer. The manufacturer may add features like warranty, customer support, club membership, or accessories that come with the computer, such as a laptop sleeve or keyboard. A computer manufacturer has multiple manufacturers that create products of similar quality that operate in a similar way, and consumers can differentiate between various offerings based on the augmented product package.

Consumers considering choosing between two similar options can choose the one with more apparent benefits, like the laptop that comes with a case and a one-year support plan. It is also possible to get consumers to pay more for using an augmented product, because the consumer may feel that the extra features make the deal better. Consumers see these options as value-adding and may interact with the product and marketing very differently depending on the level of available resources.

The costs to create an augmented product can vary. Often, small, cost-effective measures can significantly increase the retail price, which makes it a good deal for the producer, though not necessarily so good for the consumer. Some augmented product bundles depend on the fact that few consumers will enjoy the extra feature. An insurer may add a free towing package to premium policies, for example, on the grounds that it will not be used by all customers and therefore towing costs must remain low.

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Marketing departments work with product development teams to decide how to develop new products and what kinds of features to offer. The team may have suggestions for additions that they think could add value, and marketers may use discussion groups and other consumer studies to gather data. They can also create product tiers, where consumers can choose from low-, mid-, and high-price versions with more features at each step. This can emphasize the benefits of the scaled-up product, showing consumers what they get on the cheaper end of the spectrum, like a computer with very low RAM or a car with only minimal features.

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