This is the product – or service – that you are marketing. It’s not just about the product itself, but the proposition that goes with it. For example, when buying a new car, the proposition element will be adds-on such as extended warranty, free servicing, which make the commodity of greater value to the customer.
You can also take the same service and create different propositions to appeal to different markets, for example different types of bank accounts.
Brand and reputation, as you might expect, are essential components of the product or service, as they add value and desirability.