Chapter 9:
Product: The Online Offer
Learning Objectives
Many Products Capitalize on Internet Properties
A product is a bundle of benefits that satisfies the needs of organizations or
consumers and for which they are willing to exchange money or other items of
value. Some products such as search engines are unique to the Internet while other
products such as books simply use the Internet as a new distribution channel,
often adding unique technology-enabled services.
Creating Customer Value Online
Competition for online customers and dollars has never been fiercer. Firms must
employ strategies that result in customer value (value=benefits-cost). Value may
Product Benefits
The advent of the Internet created a new set of consumer-desired benefits. As
Internet technology evolves, user needs change and opportunities expand. Users
expect effective web navigation, quick download speeds, and site organization.
Attributes
Product attributes include overall quality and specific features. Product
features include color, taste, style, size, and speed of service. The Internet
has created a market of mass customization available at rock-bottom
prices.
Branding
A brand could be a name, a symbol, or other identifying information.
That information can be trademarked to legally protect it from use by
others.
Brand Equity – The intangible value of a brand measure in dollars.
Several factors contribute to the value of a brand, most notably
popular culture trends.
Branding Decisions for Web Products – Companies must decide if
they should use the existing brand or create new brands for the
online business.
Using Existing Brand Names on the Web – Companies may
choose to use this strategy if the brand is well known and
has strong brand equity.
Support Services
Successful companies recognize the importance of customer service.
Click-and-brick organization’s combine online and offline service to
maximize the customer experience and minimize downtime and
frustrations.
Labeling
E-Marketing-Enhanced Product Development
The complexity of website and online offerings is growing exponentially. Online
developers must now combine digital text, graphics, video, and audio. They must
integrate front-end customer service operations with back-end data collection and
fulfillment methods to deliver product.
Customer Co-design via Crowdsourcing
The Internet has spawned several successful and unusual business
partnerships for business and consumer collaboration. Firms are
encouraging and soliciting the input from strategic partners and consumers
alike in development of their products, services and website.
Internet Properties Spawn Other Opportunities
New-Product Strategies for E-Marketing
Firms may offer one product/service and focus their organization around
the success of that product/service, or use an already successful
product/service mix to exploit the Internet and gain online success.
Product Mix Strategies – Product mix strategies can be categorized
into six new product strategies. These categories are: discontinuous
Chapter Summary
A product is a bundle of benefits that satisfies the needs of organizations
or consumers and for which they are willing to exchange money or other items of
value. A product can be a tangible good, a service, an idea, a person, a place, or
something else. The entire product experience provides value to the customer, is
defined by the customer, involves customer expectations, and applies at all price
levels.
Of the five general product decisions that comprise a bundle of benefits
for meeting customer needs, four (attributes, branding, support services, and
labeling) apply to online products. Companies creating new products for online
sale must decide whether to use existing brand names or create new brand names
Chapter Outline
Opening Vignette: The Google Story
Have the class read the opening vignette on Google.com. Google has quickly
become the most popular search engine available, and its recent success in the
stock market is an indication of its branding and market strength. Google is
already earning a higher operating income than online giants eBay, Yahoo! and
amazon.com. In addition, its operating profit margin is higher than Microsoft’s
I. Many Products Capitalize on Internet Properties
A product is a bundle of benefits that satisfies the needs of organizations or
consumers and for which they are willing to exchange money or other items of
value.
A. Product Dimensions
2. Services
4. People
B. Purchase Categories
1. B2B (Business to Business)
3. B2G (Business to Government)
5. C2B (Consumer to Business)
6. G2C (Government to Consumer)
II. Creating Customer Value Online
A. Competition for online customer attention and dollars is fierce
2. Value is the entire product experience
4. Value involves customer expectations
5. Value is applied at all price levels
III. Product Benefits
The Internet has created a new set of desired benefits. Web users want effective
navigation, quick downloads, site organizations, attractive and useful site design,
A. Attributes
1. Overall quality
2. Specific features
a. Color
3. Internet benefits
a. Atoms to bits
b. Mass customization
i. Tangible goods (laptops at rock bottom prices)
B. Branding – a brand includes a name, a symbol or other identifying
information. When registered with the U.S. Patent Office, it becomes
a legally protected trademark. A brand is a way for companies to
differentiate themselves from competitors.
1. Brand Equity – the intangible value of a brand, measured in
dollars. Components to a great global brand:
a. Research your corporate constituencies – information
is critical
2. Brand Relationships and Social Media – having a relationship
with your consumers to make the product/service a part of their
life. a. Duncan’s five levels of brand relationship intensity:
i. Advocacy
ii. Community
b. The explosion of social media has escalated this
process with peer-to-peer communication about
brands
c. Forrester’s three roles for social media in branding
i. build trust through social media relationships
3. Branding Decisions for Web Products
The question online companies must answer: to apply existing
brand names to online products, or develop new brand names.
Do we lend our brand name as a co-brand with other firms?
What domain name do we choose?
a. Using existing brand names on the web – if the brand
is well known and has strong brand equity, this makes
sense
b. Creating new brands for Internet marketing – the
name is very important. Good names will:
i. Suggest something about the product
Marketers must use care to ensure that brand names translate
correctly and favorably into other languages. For example, Chevy
Nova in Spanish translates to “Chevy no-go.” Coca-Cola in
Chinese translates to “bite the wax tadpole.”
c. Co-branding – when two different companies put
their brand names on the same product.
i. CNN and Sports Illustrated formed cnnsi.com
C. Support Services
2. Customer service is a critical component in the value
D. Labeling – labels:
1. Identify brands
3. Identify product ingredients
5. Create product recognition
http://www.chapmanrg.com/ME/index1.htm
Follow this link to find an interesting exercise on the power of branding
Another fun branding activity – ask the students what they use to clean their ears
– how many answered “Q–Tip”? Q-Tip is a brand; the product is cotton swab.
IV. E-Marketing Enhanced Product Development
Developers must now 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.
A. Customer co-design via crowdsourcing
1. The power shift to buyers combined with the Internet’s reach
enables unusual business partnerships
3. The Internet allows for collaboration electronically across
international borders
5. Many firms allow customers to assist in website creation
a. Blogs
B. Internet Properties Spawn Other Opportunities
1. The Internet spawns unusual new products and companies
2. The Internet is the great information equalizer
a. Fierce competition
C. New-Product Strategies for E-Marketing
Some companies introduce one successful online product and build
their firm around that product, while others add the online portion to
their already successful product mix.
1. Product Mix Strategies
a. Discontinuous innovations – new-to-the-world products
i. Music CDs
ii. Television
iii. Web-authoring software
b. Disruptive innovations – changes the existing market in
a drastic way
c. New-product lines – when firms take an existing brand
name and create new products in a completely different
d. Additions to existing product lines – when
organizations add a new flavor, size or other variation
to a current product line.
i. The New York Times (different version than
hard copy)
e. Improvements or revisions of existing products – “new
and improved”
i. Web2Mail.com
g. Me-too lower-cost products – introduced to compete
with existing brands by offering a price advantage
i. EarthNet (dropped prices against AOL)
ii. Eudora Light