Chapter 9 Notes: Product - The Online Offer

Chapter 9: Product - The Online Offer

Learning Objectives

• 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.

A. Products Capitalize on Internet Properties

• A product is a bundle of benefits that satisfies needs of organizations or consumers.
• Customers exchange money or other items of value for these benefits.
• Products include tangible goods, services, ideas, people, and places.

Marketing Mix & CRM Strategies & Tactics

• Organizations conduct research to determine customer needs when creating new products.
• They design strategies to deliver more value than competitors.
• The marketing mix and customer relationship management (CRM) work together to produce relational and transactional outcomes with consumers.
• Integrated Marketing Communication (IMC) is related to relational outcomes, product/offer, and distribution channels focused on customers.
• Price and value are related to transactional outcomes within the CRM framework.

B. Creating Customer Value Online

• Customer Value = Benefits - Costs
  $Customer \ Value = \frac{Benefits}{Costs}$
• Decisions regarding products must provide benefits to customers.
• Key elements influencing customer value:
  • Attributes
  • Branding
  • Support Services
  • Labeling
  • Packaging

C. Product Benefits

• Customer benefits include:
  • Connecting, creating, enjoying, learning, trading, and giving online.
  • Effective web navigation, quick download speed, clear site organization, attractive and useful site design.
  • Secure transactions, privacy, free information/services, user-friendly web browsing and email reading.
  • A place to join conversations, curate images/videos, and create/upload content.

1. Attributes

• Product attributes include overall quality and specific features.
• Customers generally believe that "you get what you pay for" regarding quality.
• Product features include:
  • Color, taste, style, size, online speed of service.
  • Ability to connect and personalize.
• Product benefits are a key component of the value proposition.

2. Branding

• A brand includes a name, symbol, or other identifying information.
• A trademark can be any word, phrase, symbol, design, or combination that identifies goods or services.
• It distinguishes a company from its competitors.
• A trademark:
  • Identifies the source of goods or services.
  • Provides legal protection for the brand.
  • Helps guard against counterfeiting and fraud.
• A brand is more than its graphic and verbal representation in marketing materials.
• A brand also represents:
  • A promise to customers.
  • Beliefs in the market’s mind about what the brand delivers.
  • Innovation to improve the brand promise.
  • Trust in customers that the brand will deliver on its promise.
  • The sum of all customer touchpoint experiences.
  • A relationship between buyer and brand.

3. Brand Equity

• Brand equity represents the value of a brand.
• It is the difference between the value of a branded product and the value of that product without the brand name (Rosenbaum-Elliott, 2015).

4. Brand Relationships and Social Media

• Social media escalates the brand relationship process with peer-to-peer communication about brands.
• Three key roles of social media in branding:
  • Build trust.
  • Differentiate the brand.
  • Nurture consumers to build brand loyalty.

5. Five Levels of Brand Relationship Intensity (Tom Duncan, 2002)

1. Advocacy: Customers tell others about their favorite brands online and offline.
2. Community: Customers communicate about brands with each other.
3. Connection: Customers communicate with the company between purchase events.
4. Identity: Customers proudly display the brand name of products they use.
5. Awareness: Customers include the brand in their list of possible purchases.

• Relationship intensity increases from awareness to advocacy.

6. Branding Decisions for Web Products

• Businesses selling products online face branding choices, such as:
  • Using existing brand names.
  • Establishing new ones for new products.
  • Considering co-branding with other companies.
  • Selecting an appropriate domain name for their website.

a. Using Existing Brand Names on the Web

• An existing brand name can be used for product extensions if the brand is well-known and has strong brand equity.
• When products with offline sales introduce online extensions, many choose the same brand name.

b. 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.
  • Be short, memorable, easy to spell, and translate well into other languages.

c. Co-Branding

• Co-branding occurs when two companies form an alliance and put their brand names on the same product or service.
• It is common online and can build synergy through expertise and brand recognition, as long as target markets are similar.

d. Internet Domain Names

• A URL (Uniform Resource Locator) is a Website address.

• Also called IP (Internet Protocol) address and domain name.

• http:// indicates that the browser should expect data using the hypertext protocol.

• The top-level domain may be .com or a country name (e.g., .mx for Mexico, .uk for the United Kingdom).

• "www" is no longer necessary.

• Root Domain: Includes domain name and top-level domain

• Examples of Top-Level Domains (TLDs):

  • .com: Commercial businesses
  • .org: Organizations (generally charitable)
  • .net: Network organizations
  • .gov: U.S. government agencies
  • .mil: Military
  • .edu: Educational facilities
  • .ca: Canada
  • .uae: United Arab Emirates

• The Internet Corporation for Assigned Names and Numbers (ICANN) is a non-profit corporation that makes decisions about protocol and names.

• Domain registration services are available at low cost.

• Organizations should purchase alternative or related names and spellings.
  *Coca-Cola owns cocacola.com, coca-cola.com and coke.com, among others.

• Picking the right domain name can:

  • Direct people correctly to a site.
  • Build consistency in marketing communications.

e. Support Services

• Customer support during and after purchases is critical in the value proposition.
• Customer service representatives help customers with installation, maintenance, product guarantees, service warranties, etc., to increase customer satisfaction.

f. Labeling

• Product labels are tags that give consumers essential details such as ingredients, usage instructions, safety warnings, and branding elements.
• Labeling has digital equivalents online.
• Online labels provide information about product usage and features.
• They also provide legal information about copyright use.

D. Marketing Enhanced Product Development

• Developers must integrate front-end customer service operations with back-end data collection and fulfillment method to deliver product.
• This requirement creates deep learning curves for traditional companies.
• E-marketers need to consider factors that affect protective elements and product mix strategy with new technologies.

1. Customer Codesign via Crowdsourcing

• Internet technology allows collaboration electronically among consumers and across international borders.
• Software developers often seek customer input about new products.
• They often allow users to download beta version products, test them, and provide feedback.
• Good marketers look for customer feedback to improve products.
• Some set up sites to gather customer ideas and input.

2. New-Product Strategies for E-Marketing

• Many new products are introduced by "one-pony" firms built around the company's first successful product.
• Other firms add internet products to an already successful product mix.
• Product mix strategies can help marketers integrate offline and online strategies.

3. Product Mix Strategies

• Firms select strategies based on marketing objectives, risk tolerance, resource availability, etc.
• Types of strategies:
  • Discontinuous innovations: New-to-the-world products. Disruptive innovation changes the existing market drastically.
  • New-product lines: Companies use an existing brand name to create new products in a different category
  • Additions to existing product lines: Adding a new flavor, size, or variation to a current product line.
  • Improvements or revisions of existing products: Introduced as new and improved, replacing the old product.
  • Repositioned products: Current products targeted to different markets or promoted for new users.
  • Me-too lower-cost products: Introduced to compete with existing brands by offering a price advantage.