Product: The Online Offer

Chapter 9 Objectives After reading Chapter 9, you will be able

to: Define product and describe how it

contributes to customer value. Discuss how attributes, branding,

support services, and labeling apply to online products.

Outline some of the key factors in e-marketing enhanced product development.

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The Google Story In 1998, co-founders Brin and Page delivered

an innovative new search strategy that ranked results on popularity as well as keywords.

Today, Google performs a bilion searches a day in 181 countries, speaks 146 languages and is the most-visited U.S. Web site.

Had revenues of $37.9B and 25.7% in net income in 2011 and continues to grow in sales, new markets, and new products offered.

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The Google Story, Cont. Uses a media e-business model to generate

revenue from several B2B markets: Licensing of its search services. Sales of advertising to Web advertisers, 96% of its

revenues from advertising. Google’s product mix includes 24 search

products, 3 advertising products, 20 applications, and many enterprise products.

Pays close attention to user value, keeps costs low, and delivers eyeballs to advertisers. What types of products do you think Google will

launch next? http://www.youtube.com/watch?v=EjN5avRvApk

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MANY PRODUCTS CAPITALIZE ON INTERNET PROPERTIES A product is a bundle of benefits that satisfies

needs of organizations or consumers. Includes goods, services, ideas, people, and places. Products such as search engines are unique to the

Internet while others simply use the Internet as a new distribution channel.

Organizations use research to determine what is important to customers when creating new products.

The marketing mix 4 Ps and CRM work together to produce relational and transactional outcomes with consumers.

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Marketing Mix & CRM Strategies & Tactics

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Creating Customer Value Online Customer value = benefits – costs

Value is the entire product experience Value is defined wholly by the mental

beliefs and attitudes held by customers Value involves customer expectations Value is applied at all price levels

Internet can increase benefits and lower costs but it can also work in reverse

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PRODUCT BENEFITS The Internet created a new set of

consumer desired benefits. Users expect: effective web navigation, quick download speeds, clear site organization, attractive and useful site design, secure transactions, privacy, free information or services, and user-friendly Web browsing and e-mail reading. 8© 2014 Pearson Education, Inc.  

PRODUCT BENEFITS, Cont. Product decisions must be made that

deliver benefits to customers. Attributes Branding Support Services Labeling Packaging

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PRODUCT BENEFITS: Attributes Attributes include overall quality and

specific features. Product features can include color, taste,

style, size, and speed of service. Benefits also are the same features from a

user perspective (that is what will the attribute do to solve problems or meet needs and wants? e.g. Facebook)

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PRODUCT BENEFITS: Attributes, Cont. The Internet increases customer benefits in

ways that have revolutionized marketing. Move from atoms to bits; media, music, software,

and other digital products can be presented on the Web.

Mass customization is possible for: Tangible products (laptops can be sold at

rock-bottom prices) Intangible products goods (tremendous

flexibility) User personalization of the shopping

experience can be achieved.11© 2014 Pearson Education, Inc.  

PRODUCT BENEFITS: Branding A brand includes a name, symbol, or other

identifying information. When a firm registers the information with the

U.S. Patent Office, it becomes a trademark and is legally protected from imitation.

A trademark is a brand name. A trademark or service mark includes any word,

phrase, symbol or design, or any combination of used or intended to be used to identify and distinguish the goods / services of one party from those of others and to indicate the source of the goods / services

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PRODUCT BENEFITS: Branding, Cont. A brand represents a promise or value

proposition to its customers. Delivering on this promise builds trust, lowers risk,

and helps customers by reducing stress of making product switching decisions.

A brand is a way for companies to differentiate themselves from competitors.

Customers and prospects become aware of brands and develop beliefs and attitudes based on every brand contacts, also called touch points through: One–way media; e.g. advertising & packaging Two–way communication; e.g. conversations with

customer service on phone, email… 13© 2014 Pearson Education, Inc.  

PRODUCT BENEFITS: Branding, Cont.A Great Brand Intersects with Popular Culture Brand equity

Brand equity is the intangible value of a brand, measured in dollars.

A great brand taps into popular culture and touches consumers “Sweet Spot”

Popular culture trends in entertainment, sports…

Thus, many firms use celebrities as spokes-people and sponsor sporting events.

Skype sweet spot brought internet telephony to the global masses.

LinkedIn hit the spot for business networking.

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PRODUCT BENEFITS: Branding, Cont.Brand Relationships and Social Media

Advocacy

Community

Connection

Identity

Awareness

Tell others about the brand Communicate with each other

Communicate with company between purchases Display the brand proudly Is on the list of possibilities

Highest intensity

Five possible levels of brand relationship intensity Advocacy Community Connection Identity Awareness

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PRODUCT BENEFITS: Branding, Cont.Brand Relationships and Social Media The explosion of social media sites escalates

the brand relationship process with peer-to-peer communication about brands.

Ernst & Young found that 63% of entertainment and media CEOs used social media for brand buildings.

Forrester Research identified 3 roles for social media in branding: Build trust. Differentiate the brand. Nurture consumers to build brand loyalty.

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PRODUCT BENEFITS: Branding, Cont.Branding Decisions for Web Products Online companies must answer the question:

What brand names, to online products, should be applied?

1. Firms can use existing brand names (Amazon) or create new brands on the Internet. Some firms may use different names offline and

online for several reasons To avoid risk if the new product or channel should fail.

Sports Illustrated created thriveonline.com. To reposition the offline brand if the new product or

channel succeeds (e.g. NBC & MSNBC) Differentiation the online version brand from the offline

Wired magazine changed its online version name to Hotwired.

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PRODUCT BENEFITS: Branding, Cont.Branding Decisions for Web Products, Cont.2. Creating New Brands for Internet

Marketing Good brand names should:

Suggest something about the product (MySpace.com)

Differentiate the product from competitors. Be suitable for legal protection.

On the Internet, a good brand name should be short, memorable, easy to spell, and translate well into other languages Dell Computer at dell.com vs Hammacher

Schlemmer hammacher.com the gift retailer. 18© 2014 Pearson Education, Inc.  

PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products, Cont. 3. Co-Branding: Occurs when two

different companies form an alliance to work together and put their brand names on a product: • Sports Illustrated co-brands with CNN

as CNNSI.• Yahoo! Has joined with TV Guide and

Gist to provide TV listings.• Microsoft and NBC formed msnbc.com• EarthLink (the 6th largest ISP) joined

with Sprint (the telephone company) in 1998 to provide ISP services, with a new name Earthlink-Sprint name and logo.

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PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products, Cont.4. Internet Domain Names Much time and money is spent developing powerful,

unique brand names A URL (Uniform Resource Locator) is a website

address. Also called IP (internet protocol) address and

domain name. Domain names contain several levels hostnames,

sub-domains, top-level domains http:// indicates that the browser should expect

data using the hypertext protocol. “www” is no longer necessary and most sites

register their name with and without it. The top-level may be .com or a country name, such

as .sa for Saudi Arabia or .uk for the United Kingdom.

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PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products, Cont. Internet Domain

Names, Cont. The Internet

Corporation for Assigned Names and Numbers (ICANN) is a non-profit corporation that makes decisions about protocol and names.

.xxx and .post are two recently-approved extensions.

GoDaddy and other sites provide domain registration services at low cost (12.99 $ a year).

Largest Top-Level Domain Names

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PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products, Cont. 4. Internet Domain Names, Cont. More than 97% of words in the dictionary have

already been registered as domain names. Organizations should purchase alternative or

related names and spellings. Coca-Cola owns cocacola.com, coca-cola.com and

coke.com, among others. Picking the right domain name can make a huge

difference in: Directing people correctly to a site. Building consistency in marketing

communications. E.g. Time Warner’s Pathfinder,

www.pathfinder.com22© 2014 Pearson Education, Inc.  

PRODUCT BENEFITS: Support Services Customer support, during and after purchases, is a

critical component in the value proposition. Customer service reps help customers with

installation, maintenance, product guarantees, service warranties, etc. to increase customer satisfaction.

Click-and-brick organization’s combine online and offline service to maximize the customer experience and minimize downtime and frustrations.

CompUSA, Inc. combines online and offline channels to increase customer support.

Customer service as a product benefit is an important part of customer relationship management (CRM)

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PRODUCT BENEFITS: Labeling Labels identify

Brand names Sponsoring firms Product ingredients Provide instructions Create product recognition

Labeling has digital equivalents in the online world. Online labels provide information about product

usage and features. Online labels also provide extensive legal

information about copyright use on their webpage (Microsoft).

Online firms may add the Better Business Bureau logo or TRUSTe privacy shield.

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E-MARKETING ENHANCED PRODUCT DEVELOPMENT Developers are forced to combine digital text,

graphics, video, and audio, and use new Internet delivery systems.

They must also integrate front-end customer service operations with back-end data collection.

Factors that affect product development and product mix strategies with new technologies are:1. Customer Co-design via Crowdsourcing2. Internet Properties Spawn Other Opportunities3. New-Product Strategies for E-Marketing

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E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.1. Customer Co-design via Crowdsourcing

The Internet has produced several successful & unusual business partnerships for both business & consumer collaboration.

Partners form synergistic clusters to help design customer products that deliver value

The Internet allows collaboration electronically among consumers and across international borders.

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E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.1. Customer Co-design via Crowdsourcing

(Cont.) Software developers often seek customer input as

they develop new products Such as allowing users to download beta version

products, test them, and provide feedback (LEGO software for creating virtual Designs)

Good marketers look for customer feedback to improve products. Some set up sites to gather customer ideas and

input: Dell’s ideastorm.com. Sometimes this feedback comes undesirable

because of video posting sites and “word of mouse”. 27© 2014 Pearson Education, Inc.  

E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.1. Customer Co-design via Crowdsourcing

(Cont.) Research suggests that customer interaction in the

early and late stages of development increase product success

Today, some organizations allow customers to create Web site content on their sites (Amazon: reviews)

Many firms allow customers to assist in website creation Blogs set up to gather customer ideas and input. Community bulletin boards RSS (really simple syndication) XML 28© 2014 Pearson Education, Inc.  

E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.2. Internet Properties Spawn Other

Opportunities The Internet spawns new and unusual

product opportunities (GPS) The Internet is the great information

equalizer which means Fierce competition Lots of product imitation Short product life cycles

Firms are forced to create, develop, and release innovations in a matter of days or hours, rather than months.

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E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.3. New-Product Strategies for E-Marketing

Many new products, such as YouTube, Yahoo!, and Twitter, were introduced by “one-pony” firms (that introduce one successful online product and build the firm around that product)

Other firms have added internet products to an already successful product mix (Microsoft).

Product mix strategies can help marketers integrate offline and online strategies.

Companies can choose among six categories of new-product strategies, based on marketing objectives, risk tolerance, resource availability, etc.

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E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.3. New-Product Strategies (Cont.): Product Mix Strategies 1. Discontinuous innovations are new-to-the-world

products. The highest-risk strategy. Shopping agents, Search engines, Social

networking A Disruptive innovation changes the existing

market in a strong way Digital music downloads disrupted the CD

Market.2. New-product lines when firms take an existing

brand name and create new products in a completely different category

Microsoft Internet Explorer (Netscape was already available) 31© 2014 Pearson Education, Inc.  

E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.

New-Product Strategies (Cont.):Product Mix Strategies 3.Additions to existing product lines when organizations add a new flavor, size or other variation to a current product line.

The USA Today (slightly different version than hard copy)

Google (many different product lines)4.Improvements or revisions of existing products line – “new and improved”

Web2Mail.com Hotmail Yahoo web mail

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E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont.

New-Product Strategies (Cont.): Product Mix Strategies 5.Repositioned products current products that are targeted to different markets or promoted for new users

Yahoo (from search engine to portal to Life Engine)

MSNBC (younger viewers)6.Me-too lower-cost products (price advantage) introduced to compete with existing brands by offering a price advantage, the least-risky strategy

EarthNet (dropped prices against AOL)33© 2014 Pearson Education, Inc.  

A Word About Return On Investment (ROI) Marketers need a way to measure the

success of a company; ROI has been the generally accepted method.

This type of assessment is especially important when introducing new products, online or offline.

Many experts are requiring a break-even point within 3 months of inception to okay an online project.

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