1. Product: The Online Offer 1

2. 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. 2

3. 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 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 2010. 3

4. 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. Google’s product mix includes 24 search products, 3 advertising products, 20 applications, and many enterprise products. What types of products do you think Google will launch next? http://www.youtube.com/watch?v=EjN5avRvApk 4

5. 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 and CRM work together to produce relational and transactional outcomes with consumers. 5

6. Marketing Mix & CRM Strategies & Tactics 6

7. 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 7

8. 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

9. PRODUCT BENEFITS Product decisions must be made that deliver benefits to customers. Attributes Branding Support Services Labeling Packaging 9

10. 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 (e.g. Myspace) The Internet increases customer benefits in ways that have revolutionized marketing. Media, music, software, and other digital products can be presented on the Web. Mass customization is possible for tangible & intangible products User personalization of the shopping experience can be achieved. 10

11. PRODUCT BENEFITS: Attributes, Cont. The Internet increases customer benefits in ways that have revolutionized marketing. Media, music, software, and other digital products can be presented on the Web. Mass customization is possible for: Tangible products (laptops at rock bottom prices) Intangible products goods (tremendous flexibility) User personalization of the shopping experience can be achieved. 11

12. 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. A trademark is either a word, phrase, symbol or design, or combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods or services of one party from those of others 12

13. PRODUCT BENEFITS: Branding, Cont. A brand is a way for companies to differentiate themselves from competitors. A brand is an individual’s “perception of an integrated bundle of information and experiences that distinguishes a company and / or its product offerings from the competition” A brand represents a promise or value proposition to its customers. 13

14. PRODUCT BENEFITS: Branding, Cont. Brand equity Brand equity is the intangible value of a brand, measured in dollars. Several factors contribute to the value of a brand, most notably popular culture trends. Sweet Spot 14

15. PRODUCT BENEFITS: Branding, Cont. Brand Relationships Have a relationship with consumers in order to make the product/service a part of their life. Five possible levels of brand relationship intensity Advocacy Community Connection Identity Awareness 15

16. A Great Brand Intersects with Popular Culture Sweet Spot A great brand taps into popular culture and touches consumers. E.g. Dell computers sweet spot when it gave customers the ability to customize their computers online. Skype, LinkedIn. 16

17. 5 Levels of Brand Relationship Intensity 17

18. 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. MSNBC) Differentiation the online version brand from the offline Wired changed its online version name to Hotwired. 18

19. PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products 2.Creating New Brands for Internet Marketing Good brand names should: Suggest something about the product. 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. 19

20. PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products 3.Co-Branding: Occurs when two companies form an alliance and put their brand names on a product: Sports Illustrated co-brands with CNN as CNNSI. Yahoo! Has joined with TV Guide and Gist. Microsoft and NBC formed msnbc.com EarthLink joined with Sprint in 1998. 20

21. PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products 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 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. The top-level may be.com or a country name, such as.sa for Saudi Arabia or.uk for the United Kingdom. 21

22. PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products Internet Domain Names The Internet Corporation for Assigned Names and Numbers (ICANN) is a non-profit corporation that makes decisions about protocol and names. GoDaddy and other sites provide domain registration services at low cost. Largest Top-Level Domain Names 22

23. PRODUCT BENEFITS: Branding, Cont. Branding Decisions for Web Products 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. 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.com 23

24. PRODUCT BENEFITS: Support Services Customer support is a critical component in the value proposition. Click-and-brick organization’s combine online and offline service to maximize the customer experience and minimize downtime and frustrations. Customer service reps help customers with installation, maintenance, product guarantees, service warranties, etc. to increase customer satisfaction. Customer service is an important part of customer relationship management (CRM) CompUSA, Inc. combines online and offline channels to increase customer support. 24

25. PRODUCT BENEFITS: Labeling Labels identify Brand names Sponsoring firms Product ingredients Provide instructions 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 the software product. Online firms may add the Better Business Bureau logo or TRUSTe privacy shield. 25

26. 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 2. Internet Properties Spawn Other Opportunities 3. New-Product Strategies for E-Marketing 26

27. E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont. 1. Customer Co-design The Internet has spawned several successful and unusual business partnerships for both business and consumer collaboration. Partners form synergistic clusters to design customer products that delivery value The Internet allows for collaboration electronically across international borders. Good marketers look for customer feedback to improve products. They often allow users to download new products, test them, and provide feedback (e.g. LEGO) 27

28. E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont. 1. Customer Co-design (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

29. E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont. 2.Internet Properties Spawn Other Opportunities The Internet spawns new and unusual product opportunities 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. 29

30. 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 products to an already successful product mix (Microsoft). Companies can choose among six categories of new- product strategies, based on marketing objectives, risk tolerance, resource availability, etc. 30

31. E-MARKETING ENHANCED PRODUCT DEVELOPMENT, Cont. 3.New-Product Strategies (Cont.): Product Mix Strategies 1. Discontinuous innovations are new-to-the-world products. Music CDs, Television Web-authoring software 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

32. 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. 3. The New York Times (different version than hard copy) 4. Super Pages (Yellow pages) 4. Improvements or revisions of existing products line – “new and improved” Hotmail Yahoo web mail 32

33. 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) – Life Engine MSNBC (younger viewers) 6. Me-too lower-cost products (price advantage) introduced to compete with existing brands by offering a price advantage EarthNet (dropped prices against AOL) 33

34. 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. Many experts are requiring a break-even point within 3 months of inception to okay an online project. 34

35. 9-35 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall