The three levels of the product can also be used in the segmentation of markets, as
they will assume differing importance in different market segments. The car market, for
example, could be segmented into three – the economy, the family car and the luxury
segments. Although the core product is important in all three of these market segments,
it will assume greater importance for the economy car segment which is likely to be less
concerned by the tangible and augmented product. As each of these segments will have
different characteristics, they will therefore respond differently to the tools of product
differentiation. This highlights the importance of market research in the process of
product differentiation.