Download Product: How the Internet affects product offerings

Product: How the Internet
affects product offerings and
branding
Building long-term customer
relationships
MARK 430 - Week 12
Objectives for today....to
understand:
 How the Internet affects products and
services
 Mass customization
 Branding
 Building long term customer relationships
4 steps to successful marketing strategy
Understanding customer needs and online behaviour
(market research, data mining, web analytics) (Weeks 1 - 4)
Formulate a strategy to fill needs (segmentation,
targeting, positioning) (Weeks 4 - 5)
Implement effectively and efficiently (web usability, stickiness,
advertising, search engine optimization, email marketing, pricing,
distribution, product development) (Weeks 5-12)
Build trusting relationships with customers (Week 13)
What’s your product?
 A product is:
a bundle of benefits that satisfies the needs of
consumers and for which they are willing to exchange
money (or other items of value)
 Product includes:
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Tangible goods
Services
Ideas
People
Places
 Or combinations of the above
Online value creation
 4 general product decisions that marketers
make to but together a bundle of benefits that
meet customer needs
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Product attributes
Branding
Support services
Labeling and packaging
With the exception of labeling/packaging, all
can be delivered digitally
Internet Product Types
Product Type
Digitized Good
Service
Retail or
Distribution
Service
Product
Augmentation
Primary Purpose
Internet Properties
Is not used up in
consumption; easily
reproducible;
transferable
Standardizes service;
allows producer and
Performs core service consumer to be
separated in space and
benefit online
time; adds vividness to
intangibles
Helps dispose of
Sells, brokers, or
perishable inventory;
distributes product
aggregates demand
delivered offline
Adds extra services
Differentiates at low
or benefits to a
incremental cost
service or product
Provides core benefit
in digitized form
online
Source: Mohammed et al. Internet Marketing. McGraw Hill. 2004.
Examples
Downloadable software,
music, newspapers
Schwab.com,
eDiets.com, Yahoo
Sports Fantasy Baseball
Plus
Amazon.com, priceline,
MySimon.com
FedEx, Fidelity
Product trends online
 Digitization
 Mass customization
Digitization: Music industry
 Same product, just a different delivery
format?
 Or......does the delivery format make a
fundamental difference to the product?
 What difference does digitization make?
Online customer involvement in
product design: Mass customization
 Mass produced goods with customizable elements
 Customers can select certain, predefined
components to suit their own preferences
 Often includes some personal identification mark
 Made possible in the supply chain by speed of
communications technology
 Reflect.com
Is a mass customization part of a
personalization strategy?
 Only helps form customer relationships if
combined with a personalized user
experience
 Customer-centric process rather than productcentric
 PrintingForLess.com missed opportunities
 No user account (customer history is “lost” to
customer
 Can’t check what was ordered last time – printing
configurations, pricing, layout
 Can’t just order “same again”
 Company can’t remind its customers – no ongoing
personal relationship
Brand as an aspect of product
Definition of brand
 American Marketing Association definition:
 A brand is a name, term, sign, symbol, or design,
or a combination of them intended to identify the
goods and services of one seller or group of
sellers and to differentiate them from those of the
competition
 Brand refers to all aspects of a product that relate
to identity or personality
Consumer responses that make up brand
equity
 Brand awareness: the strength of the brand’s
presence in the consumer’s mind. A strong
brand will be recollected more easily, whether
prompted by advertising or by a purchase
occasion
 Brand associations: the connections that
consumers make to the brand
 Strength of association
 Valence - degree to which association is positive
or negative
 Uniqueness
Issues particular to executing online
branding strategies
 Online interactions bring added security and privacy
concerns
 Limited familiarity with online brands makes fostering
trust more difficult
 Customization means one customers image of the
brand may be different from the next customers
image
 Building brand awareness requires significant
investment - especially for “second movers”
 Online brands have the potential to generate loyalty
more quickly - especially if customers are targeted
effectively
Do strong brands matter online?
Yes - Strong Brand is
Essential
 Strong brands attract
customers
 Positive associations for
consumers
 Builds trust and loyalty
 Clear brands are
associated with higher
conversion rates
 The network effect
No – brands are less
important online
 Alliances — not strong
brands — are most
important
 Third-party evaluators
(such as BizRate) will
increasingly influence
online purchases
 Speed to market is more
important than branding
 Trend toward
customization means the
“mega-brand” is no longer
relevant
Examples of Internet brands with
strong equity?
 Write down the first 3 Internet brands you can
think of
Internet brands at home and at work (USA)
AOL
The Weather
Network
Source: Nielsen//NetRatings
Should Offline Firms Create New Online
Brands?
No – keep same brand
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It takes an enormous amount of
time and money to build a
strong brand name
Customers who purchase online
are assured that services are
available offline (returns etc)
It is difficult to uncover
interesting new brand names
The online brand and the offline
brand can have a synergistic
effect
Target customers will not be
confused by brand offerings
appearing online under a
different name
Yes – build a new brand
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Using an existing brand limits
the growth of the user base –
eg. Travelocity is disassociated
from its owner Sabre and
partner American Airlines
Existing offline brands may not
“get the Net”
It is possible to sign up more
partners and form new alliances
when a third-party name is used
that is not associated with any
of the players
Quotes on Online Branding
 “Brands stand as comfort anchors in the sea of confusion, fear,
and doubt. In dynamic markets, strong brands have more value
than ever, precisely because of the speed with which these
markets move.” – Chuck Pettis, Technobranding
 “It took more than 50 years for Coca-Cola to become a worldwide
market leader, but only five years for online search engine Yahoo
to gain market dominance. The role of the brand has changed
dramatically and has created a vacuum between offline and
online brands.” – Mark Lindstrom, Executive Director, ZIVO
 “A company’s website is the brand. It’s the hub of consumer
experience, the place where all aspects of a company, from its
annual report to its products to its support, intersect. It’s the
company in a nutshell, all there in a way that just is not possible
in the analog world.” – Sean Carton, Carton Donofrio Interactive
Design Compelling Brand Intent
 Brand intent brings alive the value proposition
 ie. focus on customer benefits
 Brand intent should be
 clear - easy to understand
 compelling - provide positive brand associations
 Google is a good example:
 benefits are very clear “Google helps users find
the information they’re looking for quickly and
effectively”
 compelling because these benefits are essential to
the search engine category
Executing a branding strategy
 Execute with integrity
 provide a clear, trustworthy message
 the firm must be able to deliver on the promise made by the
brand
 this is especially important if the brand is also offline
 Execute consistently
 reinforce the branding strategy across all the elements of the
marketing program - you are teaching consumers the distinct
and memorable personality of your brand
 Focus on the long term - most strong brands take
time to develop
 Be innovative and opportunistic - be ready to try new
techniques – Mercedes-Benz USA Owners Online:
“Rewards that extend past your car”
Sustainability: building a
relationship of trust with customers
 2 phases of the relationship between
customer and firm
 Acquisition
 Retention
 Different marketing strategies needed for
each phase
Customer acquisition: what is
important?
 Creating trust by:
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Trust-based marketing (rather than push)
Permission marketing
Branding (they know what to expect)
Trusted advisor (eg. GM Motor Choice)
“Independent” third party and customer reviews
Product guarantees, return policies, privacy
policies
 Other web site trust cues
Customer retention: what is
important?
 Loyalty on the web is hard to achieve (low
switching costs)
 Trusted brands – good at following through
 Stickiness
 Online tools, customization, order tracking
 Product add-ons and customer service
 CRM and data mining
 Loyalty programs
 Innovation
Travelocity case study
 Created a loyalty program for frequent buyers
of travel services
 To create customer loyalty
 To differentiate itself from the competition
 To provide it with data that would help the
company continue to innovate