Product: The Online Offer E-M ARKETING /6E C HAPTER 9

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-2 C HAPTER 9 O BJECTIVES  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.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-3  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 billion searches a month, speaks 345 languages and is the most-visited U.S. website.  Had revenues of $29.3 billion and $10.4 billion in profit in T HE G OOGLE S TORY

T HE G OOGLE S TORY, CONT.  Generates revenue from several B2B markets:  Licensing of its search services.  Sales of advertising to Web advertisers.  Google pays close attention to user value, keeps costs low, and delivers eyeballs to advertisers.  Google’s product mix includes 15 search products, 3 advertising products, 21 applications, 5 enterprise products, and 2 mobile applications.  What types of products do you think Google will launch next? ©2009 Pearson Education, Inc. Publishing as Prentice Hall 10-4

all 5 A GES Teen age : Have Time + Energy …but No Money Working Age : Have Money + Energy …but No Time Old age : Have Time + Money …but no Energy

M ANY P RODUCTS C APITALIZE ON I NTERNET P ROPERTIES  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 (e.g. music)  Internet offers product developers new oportunities and challenges.  Organizations use research to determine what is important to customers when creating new products.  The marketing mix and CRM work together to produce relational and transactional outcomes with consumers. ©2009 Pearson Education, Inc. Publishing as Prentice Hall 10-6

M ARKETING MIX AND CRM STRATEGIES ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7 Relational outcomes Transactional outcomes

C REATING C USTOMER V ALUE O NLINE  Customer value = benefits – costs, and is:  The entire product experience – from awareness to postpurchase experience  The customer’s perception  The customer’s expectations  Value applies to all price levels  5 general product decisions must be made that deliver benefits to customers.  Attributes  Branding  Support Services  Labeling  Packaging – cannot be delivered online © 10-8

P RODUCT B ENEFITS : A TTRIBUTES  Attributes include overall quality and specific features.  Benefits are the same features from a user perspective.  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, examples are computers, music CDs, research services. Automobiles??  User personalization of the shopping experience can be achieved. Requires website registration usually. ©2009 Pearson Education, Inc. Publishing as Prentice Hall 10-9

P RODUCT B ENEFITS : B RANDING  A brand includes a name, symbol, or other information.  When a firm registers that information with the patent office, it becomes a trademark.  A brand represents a promise or value proposition to its customers. ©2009 Pearson Education, Inc. Publishing as Prentice Hall

B RANDING  Brand – an individual’s perception of an integrated bundle of information and experiences that distinguishes a company and/or its product offerings from the competitors (Duncan, 2002)  Build trusts, lowers risks and help customers in making decisions, example when wanting to switch products/brands.  Reduces stress for customers, especially if it involves online payment. ©2009 Pearson Education, Inc. Publishing as Prentice Hall 11

B RAND E QUITY  Brand equity is the intangible value of a brand, measured in dollars.  A great brand taps into popular culture and touches consumers. (Harley-Davidson owners; Apple computers users; Maher Zain fans)  Trends in sports and music are followed closely by companies.  Use of entertainers and sports personalities to promote brands. Sponsorship of events and personalities ©2009 Pearson Education, Inc. Publishing as Prentice Hall

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l 14 Company: Nike (NKE) and all other sponsors Crisis: A scandal was unleashed when Golf star Tiger Woods crashed his car into a tree near his home. It was soon discovered that he and his wife had been fighting because Woods had been cheating-- with more than a dozen mistresses. Pre-Crisis Stock Price (NKE): November 25, $65.70 Post-Crisis Stock Price (NKE): December 9, $61.95 Decrease: 5.71%.

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H IGHEST V ALUE G LOBAL B RANDS ©2009 Pearson Education, Inc. Publishing as Prentice Hall Toyota Johnson & Johnson Honda Volkswagen Hewlett-Packard Panasonic Dell Siemens Danone BMW Top Brands in 2012

G REAT B RANDS ©2009 Pearson Education, Inc. Publishing as Prentice Hall 17

L EVELS OF B RAND R ELATIONSHIP I NTENSITY  Exhibit 10.6 displays 5 levels of brand relationship intensity. ©2009 Pearson Education, Inc. Publishing as Prentice Hall Ensure online messages and employee communication convey positive brand image Consistent use of identifiable and visible elements e.g fonts, logos, writing tone Controlling brand image on the internet can be difficult because of the amount and multiple sources of information and the speed of transmission of the information

B RANDING D ECISIONS FOR W EB P RODUCTS  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.  Recommended is different names and different strategies for online and offline products  The most powerful online brand names have no offline counterparts – E-bay; Amazon; Google. ©

C REATING N EW B RANDS FOR I NTERNET M ARKETING  Good brand names should:  Suggest something about the product – google, yahoo  Differentiate the product from competitors.  Be capable of legal protection.  On the internet, a good brand name should be short, memorable, easy to spell, and translate well into other languages.  Cobranding occurs when two companies form an alliance and put their brand names on a product:  Sports Illustrated co-brands with CNN as CNNSI  Yahoo! Visa shopping pages  EarthLink-Sprint ©

S TEPS IN CREATING A NEW SUCCESSFUL BRAND  Find an open category in the mind.  Give that open category a simple name - sports drink, energy bar, energy drink.  Select a powerful brand name that conjures up vivid imagery. Red Bull energy drink, DieHard batteries.  Launch the brand with an intensive PR campaign.  When the brand is established, protect your position with a massive advertising program. ©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-21

I NTERNET D OMAIN N AMES  A URL (Uniform Resource Locator) is a Web site address.  Also called an IP (internet protocol) address and domain name.  Domain names contain several levels.  indicates that the browser should expect data using the hypertext protocol.  The second-level is often the name of the company.  The top-level may be.com or a country name, such as.my for Malaysia or.uk for the United Kingdom.  There are at least 40 top level names available including.biz,.info,.pro, etc. ©2009 Pearson Education, Inc. Publishing as Prentice Hall

I NTERNET D OMAIN N AMES, CONT.  The Internet Corporation for Assigned Names and Numbers (ICANN) is a nonprofit corporation that makes decisions about protocol and domain name assignment, registration, etc.  GoDaddy and other sites provide domain registration services at low cost.  More than 97% of words in the dictionary have already been registered as domain names. ©2009 Pearson Education, Inc. Publishing as Prentice Hall

I NTERNET D OMAIN N AMES, CONT.  Organizations should purchase related names and spellings. (cocacola.com; coca-cola.com; coke.com)  Cater for possible misspelling as well  Keep the names from getting into the hands of others  Picking the right domain name can make a huge difference.  Directing people correctly to a site.  Building consistency in marketing communications. ©2009 Pearson Education, Inc. Publishing as Prentice Hall

I NTERNET D OMAIN N AMES, CONT.  1. Insure.com, sold to QuinStreet for $16 million in Sex.com, sold for $12-$14 million in Fund.com, sold for $9.99 million in Porn.com, sold for $9.5 million in Business.com, sold for $7.5 million in Diamond.com, sold to Ice.com for $7.5 million in Beer.com, sold for $7 million in Israel.com, sold for $5.88 million in Casino.com, sold for $5.5 million in Toys.com, sold to Toys ‘R Us for $5.1 million in ©2009 Pearson Education, Inc. Publishing as Prentice Hall 25

L ARGEST T OP -L EVEL D OMAIN N AMES E X ©2009 Pearson Education, Inc. Publishing as Prentice Hall

P RODUCT B ENEFITS : S UPPORT S ERVICES  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.  Sometimes it may necessitate the employment of your best employees to be used in this area.  Some products require more support service than others ©2009 Pearson Education, Inc. Publishing as Prentice Hall

P RODUCT B ENEFITS : L ABELING  Identify brands, the firm(s), ingredients, instructions for use etc  Labeling has digital equivalents in the online world – at websites  Online “labels” provide information about product usage, features, and installing software.  Online “labels” also provide extensive legal information about the software product.  In the USA online firms may add the Better Business logo or TRUSTe privacy shield to their sites to give customers the confidence and trust.  BBB has been involved in controversies – Ritz Carlton hotel was graded ‘F’. ©

M ICROSOFT ’ S T ERMS OF U SE L ABEL  Exhibit 10.8 ©2009 Pearson Education, Inc. Publishing as Prentice Hall

C USTOMER C ODESIGN  Business and consumer collaboration 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.  Blogs to invite comments and news companies encourage uploading of videos of newsworthy items.  Development of product applications by independent developers – Ocarina by Ge Wang for iphone. ©2009 Pearson Education, Inc. Publishing as Prentice Hall

I NTERNET CREATES OPPORTUNITIES  Unusual new products can be created on the net quickly – ‘pods’ on lectures and items of interest.  Online travel agents like Expedia, Orbitz, and Travelocity, for example, are attacking offline competitors in four areas: They offer a hard-to-find serviceExpediaOrbitzTravelocity  airline comparison shopping;  they enable customers to find the lowest price;  they bring together a seemingly complete selection of all available flights that meet the traveler’s criteria;  and they leverage the need to get the most current information for this kind of purchase decision  Music - tribute to Frank Sinatra done within a few hours after his death. all 31

N EW -P RODUCT S TRATEGIES : P RODUCT M IX S TRATEGIES  Many new products such as, YouTube, Yahoo!, and Twitter, were introduced by “one-pony” firms.  Other firms have added products to an already successful product mix.  Microsoft has added software (Microsoft Office), web browser (Internet Explorer), game console (Xbox) and the latest the Windows phone  Companies can choose among six categories of new- product strategies. ©

P RODUCT M IX S TRATEGIES, CONT.  Firms will select one of the following strategies, based on marketing objectives, risk tolerance, resource availability, etc. 1. Discontinuous innovations are new-to-the-world products. (television; CDs; the PC) 2. New-product lines are new products in a different category for an existing brand name. (solid bar, powder, liquid detergents) 3. Additions to existing product lines. (various burgers at McD) 4. Improvements or revisions of existing products. 5. Repositioned products can be targeted to different markets or promoted for new uses. 6. Me-too lower-cost products. l

A CTIVITIES THAT F EED S TRATEGIC P LANNING FOR N EW P RODUCTS Ongoing marketing planning (e.g., need to meet new aggressive competitor) Ongoing corporate planning (e.g., senior management shifts technical resources from basic research to applied product development) Special opportunity analysis (e.g., a firm has been overlooking a skill in manufacturing process engineering) 2-34

S OURCES OF I DENTIFIED O PPORTUNITIES An underutilized resource (a manufacturing process, an operation, a strong franchise) A new resource (discovery of a new material with many potential uses) An external mandate (stagnant market combined with competitive threat) An internal mandate (new products used to close long- term sales gap, senior management desires) 2-35