What Is Product Hierarchy?

The product hierarchy is one of the aspects of marketing that many beginners struggle to understand. 

There are just so many product classes to choose from, such as product line, product mix, and product kind. 

This article will aim to simplify everything.

What Is Product Hierarchy?

You can classify a product’s fundamental components in a hierarchy. And that way, a product’s relationship to another is evident. 

The product hierarchy ranges from necessities to specialized things that meet specific requirements. 

Rather than focusing on a single product, understanding the business as a whole helps to understand product hierarchy better. 

Sometimes, you may refer to a product hierarchy in conjunction with product categorization. 

Hence, it might be considered a type of product classification.

Suggested Read: How to Understand Your Customers Deeply

Product Hierarchy Levels

When creating a market offering, the marketer must consider five tiers of a product. 

Each product level offers more customer value. 

And when all the five levels are combined, they make up a customer value hierarchy. 

You can also link one product to another. 

Core Product

The core benefit is the most basic level. It is the primary benefit or service that the customer is purchasing. 

Marketers consider themselves to be providers of services. For example, a hotel guest is purchasing rest and sleep.

Generic/Basic Product 

The marketer must convert the real benefit into a generic or primary product at the second level. 

For example, the hotel room has a bed, a washroom, a towel rack, a wardrobe, and storage.

Expected Product:

At the third level, the marketer can create an expected product. 

This product consists of a collection of traits and circumstances. 

These characteristics are something that the customers typically expect and accept when purchasing a product. 

Hotel visitors may now enjoy a clean bed, a new towel, and considerable peace.

Augmented Product 

At this level, the marketer creates an enhanced product that exceeds consumers’ expectations to fulfill their needs. 

A remote-control television, flowers, good food, and room service are all things that a hotel can add to its offering. 

Product augmentation leads the marketer to consider the overall consumption system of the buyer. 

That includes how a product buyer completes the total task of whatever they are attempting to achieve when using the product. 

In this way, the marketer will identify many prospects for augmenting its offer in a highly competitive but appropriate manner.

Potential Product 

The potential product includes all future enhancements and changes at the fifth level. 

The difference between an augmented product and a potential product is that the former specifies what the product includes. 

In contrast, a prospective product describes how the product might evolve in the future. 

Companies are aggressively looking for innovative methods to surprise and excite customers in this area. 

A goodie on the pillow, a platter of fruits, or a video recorder with various tapes, for example, might be uncovered by a hotel guest.

Many newcomers struggle with one of the essential aspects of marketing: product hierarchy.

There are too many product classes to choose from, such as product line, product mix, and product kind. 

To grasp the product hierarchy, we must consider the entire firm rather than a single product. 

So, in this case, we’ll use automobiles as an example and try to decipher their product hierarchy.

Product Need

The primary reason for a product’s existence is to meet a need. 

People desire to travel, which necessitates the presence of cars. 

Audi automobiles satisfy this immediate product demand.

Product Family

The product family defines the essential requirement that the product meets. 

When we speak about a product family, we must consider the entire business market rather than just one market. 

Planes, trains, highways, passenger automobiles, and transport vehicles are viable options when travel is a must. 

The product family in this situation is passenger transport, whereas Audi’s product family is automobiles.

Product Class

Product class and product family have a lot in common, and you can use them interchangeably. 

Volkswagen, for example, makes charter buses and two-seater luxury automobiles, as well as other multi-passenger vehicles. 

As a result, product class categorizes distinct goods within the organization. 

It doesn’t focus on the company’s outside, like the product family. 

Mercedes, for example, is primarily found in automobiles and buses. 

As a result, you can find it in two different product categories.

Product Line

The product line refers to the entire collection of products within a single product category. 

So, if we’re talking about Volkswagen passenger cars, we’ve got the Polo and the Vento, as well as other Volkswagen models. 

On the other hand, Audi is a Volkswagen brand with several vehicle lines, including the Q series. 

Therefore the Q series is only one of Audi’s product lines, and there may be more. 

How To Make a Product Hierarchy?

Creating a product hierarchy can be a difficult task.

It may be challenging to figure out the essential requirements and characteristics.

But let’s look at how you can create a product hierarchy step by step. 

Getting To Know Your Roots

It would be best to base your product hierarchy on user needs and company value.

The shared root encourages systematic product expansion. It includes:

• Extra product lines
• Services
• Features

If a fresh concept doesn’t fit organically into your product hierarchy, you must discard it. 

Because if it doesn’t serve the “root system” you’ve developed, it’s unlikely to succeed. 

It can be challenging to coordinate “excellent” features over “great” features. 

The reason is that the latter does not match the framework. 

But doing so will prevent you from developing a “Frankenstein product” with a jumbled-up set of features.

Working with product management to find the correct base for your hierarchy will take you straight to user needs. 

What problem are you addressing for the user in the broadest sense? 

The base of dropbox’s whole platform is on team collaboration. And everything they focus on is pointed in that direction. 

Setting Your Attributes in Order

Creating a product hierarchy is similar to organizing your closet, pantry, or garage. 

Developing a product hierarchy can be as complicated or straightforward as you need it to be. 

Bear in mind that even major companies can express complicated product ecosystems concisely. 

So don’t be afraid to simplify if that’s what comes naturally. It is most likely true.

Begin by finding common characteristics and functions, then sorting them into categories based on the pain(s) they alleviate. 

Consider Facebook’s Messenger and Video Chat apps. Both are part of the same communication umbrella. 

Discoverability is at the heart of features like Recommended Connections and News Feed.

Functionality buckets should be logical groups that correspond to how the final product is presented and sold to the client. 

Doing this not only aids internal sales but also benefits customers in discussing your goods.

Enhancing the Hierarchy of Your Organization

You’ll be better off if you build your product hierarchy early on in the future. 

It becomes easier to filter and prioritize features, packaging choices develop, and road-mapping activities become less complicated.

Every time you expand your product, check if new additions fit into the hierarchy. 

If they don’t, you might want to revisit that feature or product or start a new category. 

Remember to form new classes only if they align with the category’s growth roadmap. 

Don’t just make a new category to accommodate something that doesn’t belong somewhere else.

When you introduce new features or products, ask yourself the following questions:

• Is there a natural place for this feature/product in my hierarchy?
• Is it based on the needs of the users and the company’s objectives?
• Will incorporating it has an impact on my product’s placement?
• Will incorporating it alters the way we sell?

Taking Advantage of Your Product Hierarchy

Allow your product hierarchy to serve as a guide during your product journey, and refer to it frequently.

Above all, please don’t keep it a secret.

It will teach sales representatives how to communicate about the product, classify prospects, upsell, and measure success. 

It will be simpler for marketing to:

• Structure release messaging
• Annotations
• External communications

All of this will help people know what’s new in the market. 

Internally, make it known to all the teams.

All the departments across your company will feel more confident communicating intelligently about the product. 

Customers will buy with more confidence, generate warmer word-of-mouth referrals, and have a better product experience if you promote it.

Follow the North Star

The North Star was a source of direction before compasses and GPS. 

Even though the north star moves across the sky as the earth orbits the sun, it stays north.

Similarly, your product hierarchy will evolve as your business changes.

Still, it should always remain your guiding light and your North Star.

Trust in your product hierarchy, and your product will grow effortlessly.

Why Does Product Hierarchy Matter?

Some of the product hierarchy examples are Walmart, Costco, and The Home Depot. 

These businesses have many associates, several product lines, and millions of items. 

You would assume it’s a bit of an organizational dumpster fire with so many moving elements.

It’s anything but that. All thanks to their intuitive and well-planned product hierarchy.

That’s not all, though. The product hierarchy can also help with user experience, SEO, and internal search if done correctly.

User Interaction

People who have the best user experiences can finish their tasks swiftly and efficiently. 

In seconds, you could go to The Home Depot’s website and purchase a 50-pack of stainless steel finishing nails.

Shoppers will have a much simpler time traveling to where they want to go if they can follow sensible and practical product structures.

SEO

Product and category pages are SEO-worthy. 

A strong hierarchy allows for a variety of keyword-rich content creation options.

Benefits to Employees

Finally, a hierarchy benefits your employees. 

Product hierarchy lets anyone in your company be a product advocate. 

It also allows providing a clear message about what your product does, who it’s for, and how much it’s worth.

Internal Corporate and Product Organization

A product hierarchy aids in the organization of a company’s products. 

It separates divisions and identifies essential attributes that distinguish products and services from one another. 

An effective organization can use product hierarchy and:

• Lessen the need for audits 
• Reorganization
• Save effort and cost for the organization

Teams Can Improve Web Design, Organization, and Traffic

A well-organized product hierarchy can make a website look more professional. 

It also makes it easier for customers and leads them to find the products they need. 

More online traffic means more chances for sales, which means more revenue for the business.

Enhanced Consumer Recognition and Marketing Initiatives

Product hierarchies can also assist companies in boosting their marketing efforts. 

In ways such as making products more recognizable and accessible. 

Customers learn to recognize corporate products based on their class and kind. 

And this easy recognition might aid in recalling the product when needed.

In Market Segments, You’ll Have a Better Competitive Advantage

Product hierarchies can assist in developing a significant advantage over competitors in specific markets. They can do this:

• By emphasizing essential features
• Concentrating on pricing
• Focusing on the benefits of purchasing the company’s products

Product hierarchies may influence customers to make specific purchasing decisions. 

Conclusion

Product hierarchy is crucial from an organizational standpoint. It also tells us to classify a product according to its daily use. 

Marketers know the critical principles of the product hierarchy. And they can understand customers’ basic needs and wants while achieving their company objectives.

In market research, the product hierarchy levels help marketers understand two things. 

One is that customer behavior is more precise. And the second reason is that the customer-brand relationship depends on the company’s delivery.

The product hierarchy measures the importance of a product in a company’s overall value proposition. 

The more defined and aware you are of these levels, the easier it will be to build a responsive, accessible, and navigable site. 

Although web technologies change, certain fundamentals, such as defining your product hierarchy, will always remain. 

If each level is clearly defined, it helps leverage different marketplace components to maximize profitability.