Lecture 3 Product

Product — Today’s Objectives Objectives will be to: Develop a clear definition of product Discuss how the 2Is affect product Examine the product development process Explore how products enable customer relationships

Product Defining Product How the 2Is Affect Product The Product Development Process How Products Enable Customer Relationships EBay Case Study Conclusion

Product Defining Product How the 2Is Affect Product The Product Development Process How Products Enable Customer Relationships EBay Case Study Conclusion

Exhibit 3.1: Product Value Hierarchy Differentiation Extended Warranty Trade In Financing Meal Preparation Fitness Books Exercise Plan Augmented Product Value Proposition Engine Tires Radio Daily Newsletter Advice In-Depth Information Basic Product Transportation Dieting Information Core Benefit Traditional: Sports Utility Vehicle New Economy: e-diets.com

Exhibit 3.2: Internet Product Types

Product Defining Product How the 2Is Affect Product The Product Development Process How Products Enable Customer Relationships EBay Case Study Conclusion

The Effects of the 2Is on Product Individualization Interactivity Users can redevelop aspects of the product to meet individual needs and preferences Firms can provide more targeted, personalized products Increases “stickiness” as customers invest time and effort to personalize Enables responsive service interaction to provide augmented value to the product Allows companies to quickly gather valuable customer data such as preferences Customers can be directly involved in the product development process Product

Product Portfolio New to Firm New to Market New Technology Degree of Innovation None Incremental Breakthrough or Discontinuous Existing Products Line Extensions New Products

Order of Market Entry Effect Typical “Hockey Stick” Adoption Curve Market Adoption Fast Follower “Me Too” Entrant Laggard First to Market Time

Product Life Cycle

Product Defining Product How the 2Is Affect Product The Product Development Process How Products Enable Customer Relationships EBay Case Study Conclusion

The Product Development Process Idea generation 1. Idea screening 2. Concept development 3. Product design 4. Prototype development 5. Test marketing 6. Commercialization 7.

Stage-Gate New Product Development Process

Divergent and Convergent Thinking in Development 1. Brainstorming 2. Idea Screening T A S K E P R I O N Number of Ideas Divergent Thinking Convergent Thinking Start Finish Ideas Expand Over Time Critical Evaluation Narrows the Focus Over Time Time

New Product Development Metrics Business Extending an existing brand name or developing a new brand? How does this concept fit into the overall product / service portfolio of the enterprise? What is the competitive landscape in this market: fierce, non-existent or somewhere in between? How attractive is the economic potential of this proposition? What is the role of each channel and how will they be integrated? Customer Is our objective to generate more business among the existing customer base, attract new users or keep existing customers? Do customers have expectations of a particular imagery or positioning that the new product must be consistent with? Does the new product fulfill a customer’s needs or aspirations? Drivers Process What is the desired timing for market introduction, seasonality or industry event? Do we have the necessary resources to bring this concept to market? How long will it take and how much will it cost to develop this new product and bring it to market? What is the required business model and how will it mesh with the existing business model? Technology Does the enterprise have the capabilities to develop and deliver this product or is an alliance partner or subcontractor required? Is there sufficient existing capacity or do new sources need to be identified? Does the required technology exist today or will new technology need to be developed? Should the technology be managed internally or outsourced? People How will the performance of the development team be measured? What does an individual employee have to commit him or herself to a particular new product development effort? What resources and skills will be needed to maximize the team’s probability of success? Enablers

Internet-Enabled Product Development Process

Beta Testing Point-Counterpoint

Product Defining Product How the 2Is Affect Product The Product Development Process How Products Enable Customer Relationships EBay Case Study Conclusion

Product Levers by Relationship Phase Four Key Stages of Customer Relationships Awareness Exploration/ Expansion Commitment Dissolution Core benefit Presentation and packaging Presentation and packaging Attributes and features Presales support Fulfillment Availability of complementary products Customer-specific attributes and features Upgrades Customer-specific attributes and features Post-sales support Tiered service Personalization Customer care Migration to different product in the portfolio Customer care

Product Defining Product How the 2Is Affect Product The Product Development Process How Products Enable Customer Relationships EBay Case Study Conclusion

EBay Expansion Through Features and Platforms

Product Defining Product How the 2Is Affect Product The Product Development Process How Products Enable Customer Relationships EBay Case Study Conclusion

Product — Conclusion Products come in two basic types: physical products and services. For all products there are three components to the overall value proposition: the core benefit, the basic product and the augmented product. There are certain product development levers available to managers The levers may be applied to both physical and service products The product development levers can be organized by product type Basic product development levers Augmented product development levers The 2Is allow firms to learn about their customers, personalize a product to meet customer preferences and offer customer relationship management tools to provide more value for customers and cut costs for product sellers