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E-Marketing 4/E Judy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 10: Product ©2006 Prentice Hall 10-1

Chapter 10 Objectives After reading Chapter 10 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. Identify the six categories of new-product strategies and the six classifications for a suggested Internet product taxonomy. ©2006 Prentice Hall 10-2

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. Generates revenue from two B2B markets: Licensing of its search services. Sales of keyword banners to advertisers. Innovative products and strong customer focus are driving its success and profitability. Go to Google.com and explore Products, GMail Google Apps and the Tool Bar. Do you agree that they are highly innovative products? ©2006 Prentice Hall 10-3

Many Products Capitalize on Internet Properties A product is a bundle of benefits that satisfies needs of organizations or consumers. Includes tangible 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. ©2006 Prentice Hall 10-4

Marketing Mix and CRM Strategies and Tactics for Relational and Transactional Outcomes ©2006 Prentice Hall

Creating Customer Value Online Customer value = benefits - costs Product decisions must be made that deliver benefits to customers: Attributes Branding Support Services Labeling Packaging ©2006 Prentice Hall 10-5

1. Attributes Attributes include quality and features. The Internet increases customer benefits in many ways. Media, music, software and other digital products can be presented on the Web. Mass customization is possible. User personalization of the shopping experience can be achieved. ©2006 Prentice Hall 10-6

2. Branding A brand includes a name, symbol or other information. A brand represents a promise or value proposition to its customers. Brand equity is the intangible value of a brand, measured in dollars. eBay, Yahoo! and Amazon rank among the top 100 brands in the U.S. A great brand taps into popular culture and touches consumers. ©2006 Prentice Hall 10-7

Brand Relationships Exhibit 10.4 displays 5 levels of brand relationship intensity. ©2006 Prentice Hall 10-8

Branding Decisions for Web Products Firms can use existing brand names or create new brands on the Internet. Some firms may use different names offline and online to avoid risk if the new product or channel should fail. Sports Illustrated created thriveonline.com. Wired Magazine changed its online version name to Hotwired. ©2006 Prentice Hall 10-9

Creating New Brands for Internet Marketing Good brand names should: Suggest something about the product. Differentiate the product from competitors. Be capable of legal protection. Be short, memorable, easy to spell and translate well into other languages. Cobranding occurs when two companies put their brand names on a product: Yahoo! Visa shopping pages EarthLink-Sprint ©2006 Prentice Hall 10-10

Internet Domain Names A URL (Uniform Resource Locator) is a Web site address. Also called an address or domain name. www.umfk.maine.edu Domain names contain several levels. The second-level is often the name of the company. The top-level may be .com or a country name, such as .mx for Mexico. ICANN is a nonprofit corporation that makes decisions about protocol and domain name assignment, registration, etc. ©2006 Prentice Hall 10-11

Largest Top-Level Domain Names Domain Designation Top Level Domain Name Number of Hosts (millions) net Networks 103.0 com Commercial 94.7 jp Japan 13.1 edu Educational 7.8 it Italy 5.5 uk United Kingdom 4.3 ca Canada 3.6 de Germany 3.5 nl Netherlands ©2006 Prentice Hall 10-12

Registering a New Domain Name Sites such as VeriSign provide domain registration services. More than 97% of words in the dictionary have already been registered as domain names. Picking the right domain name can make a huge difference. Directing people correctly to a site. Building consistency in marketing communications. ©2006 Prentice Hall 10-13

Registering a New Domain Name What happens if the firm name has been registered by someone else? Come up with alternative names: DeltaComm, a software developer was the first to register www.delta.com before Delta Airlines (originally www.delta-air.com), Buy the name from the currently registered holder. Bob.com Many creative Netizens register lots of popular names and offer them for sale at prices of up to millions of dollars: GreatDomains.com allows users to buy and sell popular domain names. Name squatters ©2006 Prentice Hall

Have an Extra $1.5 Million to Spare? Buy www.ad.com. Source: GreatDomains.com ©2006 Prentice Hall

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3. Support Services Customer support is a critical component in the value proposition. Customer service reps help customers with installation, maintenance, product guarantees, etc. to increase customer satisfaction. CompUSA combines online and offline channels to increase customer support. ©2006 Prentice Hall 10-14

4. Labeling Labeling has digital equivalents in the online world. Online “labels” provide information about installing and using software. Online “labels” also provide extensive legal information about the software product. Online firms may add the Better Business logo or TRUSTe privacy shield to their sites. SSL Certificates ©2006 Prentice Hall 10-15

Microsoft’s Terms of Use Label ©2006 Prentice Hall 10-16

Customer Codesign Business and consumer collaborations are possible on the Internet. Software developers often seek customer input about new products. They often allow users to download new products, test them, and provide feedback. Customer interaction has been found to increase product success. Amazon seeks customers’ product reviews. Latest Internet C0-design product Skins http://www.skinit.com/ http://www.designerskins.com/?gclid=CIa83OCsgIgCFRyPFQodXwbz9A ©2006 Prentice Hall 10-17

Product Mix Strategies Companies can choose among six categories of new-product strategies. Firms will select one of the following strategies, based on marketing objectives, risk tolerance, resource availability, etc. Discontinuous innovations: new-to-the-world products. TV, CD’s New-product lines: new products in a different category for an existing brand name. Microsoft IE’s, Honda’s Ridgeline Truck ©2006 Prentice Hall 10-18

Product Mix Strategies, cont. 3. New variation of a current product line. On-line stock trading 4. Improvements or revisions that replace an old product. “new and improved” Ford hybrid Escape 5. Current products targeted to different markets or promoted for new uses. Yahoo! (search->Portal->Life Engine) http://www.clickz.com/news/article.php/3335951 6. Me-too lower-cost products. Apple iPod Clones ©2006 Prentice Hall 10-19

Taxonomy of Internet Products Content Provider B2B Market Internet Infrastructure End User B2C and C2C Markets Hardware Server farm, high- speed switch Router, satellite, fiber-optic backbone Modem, PC, WebTV, PDA, assistive technologies convergence products Software Web authoring, encryption, audio/video digitizing enabling software Protocols, TCP/IP, DNS Web browser, e-mail client, decryption, audio/video player software Services E-commerce consulting, Web development, Web design, application service providers ISP, backbone service provider, Web hosting Web-based virus scan, auto updates, calendaring, e-mail Products can be classified according to the customers to whom they appeal. ©2006 Prentice Hall 10-20