Product
1. How is product defined?
a. Can be defined as both tangible goods and intangible services generally created for the purpose of transaction.
b. Two general types of products for which the levers of product development differ – physical and services.
c. The Internet is changing some accepted limitations of service-based offerings such as intangibility, simultaneity, heterogeneity, and perishability.
d. Three components to overall value proposition: core benefit, basic product and augmented product.
Through this transaction, products satisfy buyers’ specific wants or needs, and provide sellers revenue or customer goodwill that will ideally provide revenue later down the road.
Physical
Characteristics include their quality level, features, styling, brand name and packaging.
Differ from services as buyers can more easily comprehend them and their benefits since prior to purchase they can often be seen or even at times directly experienced or tested.
Services
Can be defined as any actions or intangible work that one party offers to another for the purpose of transaction (to achieve either revenue or increased customer goodwill).
An additional consideration when marketing a service is that it can be a stand-alone offering (e.g. medical services) or it may be tied to a physical product (e.g. warranties and maintenance).
Intangibility
Web can help make intangible services or experiences seem more tangible by providing cues such as virtual tours, video clips, and other advanced technologies.
Simultaneity
Traditionally one limiting factor on the scalability of many services products is that the producer and customer needed to come together at a single time for the exchange of services to take place (e.g. getting a haircut).
However on the Internet the delivery of services is technologically enabled and does not require temporal concurrence between the producer and consumer.
Heterogeneity
Services have generally been provided on a personalized level, and this personalization has been historically manpower intensive and usually impossible to reproduce on a mass production level.
The Internet has removed this limitation by allowing scalable personalization.
Perishability
The perishability of services, based upon a potential imbalance between supply and demand and market inefficiencies, is an area that many providers are utilizing the Web help to address.
E.g. priceline.com and how it has help to minimize perishability of airline seats.
Core Benefit
Most fundamental value offered by the product’s category.
This is the benefit that is usually assumed when the buyer purchases the product.
E.g. the core benefit of a car is transportation.
Basic Product
Refers to the baseline offering beyond the core benefit that a customer enters the marketplace to buy.
Represents a customer’s threshold for considering a purchase.
Basic products are differentiated from each other by the unique branding between the different products.
Augmented Product
Goes beyond a customer’s or buyer’s expectations.
Is the portion of the value proposition that is used to further differentiate one competitor’s offering from another and serve as the basis of comparison for prospective buyers.
Mature markets are suitable for companies to augment their product offerings in order to circumvent price-based competition.
2. How do interactivity and individualization affect product?
a. The 2Is allow a company to learn more about its customer, personalize a product to meet customer preferences, and offer CRM tools to provide more value for customers and cut costs for product sellers.
b. Websites which require customers to register to use the site have access to numerous tools to interact with the user as an individual.
c. Once the user has registered, the site can recognize an individual customer both on the first and return visits.
d. Using log files, a site can track a specific individual’s clickstream, i.e.where they go on a site, length of time spent, actual sequence of page views etc.
e. Based on such data, sellers greatly increase their ability to develop products based on their customers’ interests and preferences, especially in developing augmented products.
f. The Internet has also changed market research – today, syndicated reports can be found, assessed, and downloaded in a matter of minutes.. These reports are highly customizable and inexpensive relative to traditional research.
3. What are the key marketing levers for products?
Basic Product
a. Packaging
1. Can be used to make a product stand out from its competitors, appear more appealing, and communicate to prospective customers both consciously and subconsciously.
2. Can increase the tangibility of a product and the unconscious cues from packaging can be quite powerful.
3. Physical Example: Godiva Chocolates
4. Services: Federal Express’ unique envelopes
b. Attributes and Features
1. Individual attributes and features specific to a product are frequently used at the basic product level to differentiate one competitor’s offering from another.
2. They are also used to help customize an offering to individual tastes and preferences.
3. Caution should be used since the customer should not be inundated with too many choices, nor do they want to be charged additional fees for each and every one of the attributes and features included in a product.
4. Physical Example: SUVs
5. Services: Syndicated sales data services such as IRI and AC Nielsen.
c. Customer-Specified Attributes and Features
1. Key difference is the increased ability to allow customer to specify these attributes and features.
2. Physical Example: Dell Computers
3. Services: Internet services
d. Mass-Customized Product
1. Historically allowing for numerous variations was prohibitively expensive; today it is a practical reality.
2. Physical Example: Motorola’s beeper manufacturing process
3. Services: LendingTree.com
4. What does the overall product development process look like?
• Idea generation
• Screening ideas
• Product design
• Prototype development
• Business analysis
• Test marketing
• Commercialization
5. How can companies manage their product portfolio?
A strong product development portfolio generally includes:
1. New product development
2. Enhancements and line extensions of current products and services
3. Development of existing products
4. Support of current products and services
6. How can products help enable a customer relationship?
Two primary techniques:
1. Deploying the product development levers that are appropriate for the existing relationship and
2. Emphasizing the elements of the value proposition that are most relevant at a given stage of the relationship.
Relationship Stage
Lever(s)
AWARENESS
• Packaging
EXPLORATION/ EXPANSION
• Packaging
• Product Attributes & Features
• Fulfillment Capabilities
• Customer Experience • Availability of complementary products
• Customer-specified attributes and features
• Mass Customization
• Advanced Internet Functionality
COMMITMENT
• Upgrades
• Customer-specified attributes and features
• Mass Customization
• Postsales Support • Loyalty Programs
• Customer Experience
• Enabling Community
• Customer Relationship Management
DISSOLUTION
• Customer Care
7. How can a customer-centric approach to product development create strategic advantages?
New product development is impacted by:
1. Customer needs
2. Production needs and capabilities
3. Research and Development
4. Competitors and Marketplace Forces