Internet Marketing (MM 3841)

Internet Marketing (MM 3841) Week 2 Online marketing 4P: Product

Overview • Product types and Web impact • Web-based products • Products enhanced by the Web • Brand • Domain name • Customer service / product support • Labeling

Types of products • A product is a bundle of benefits • that satisfies needs of organizations or consumers • and for which customers are willing to exchange money or other items of value • Items such as tangible goods, services, ideas, people, and places. • Some products / services (e.g. search engines, ISP) are unique to the Internet. • Some products (e.g. books) simply use the Internet as a new distribution channel, often adding unique technology-enabled services.

Tangible & digital products and services • Tangible product: Use of the Web for traditional product marketing • Digital product: Software, multimedia files (e.g. song, video, etc) • Services: Web businesses (e.g. search engines)

Increased customer benefits • The Internet increases customer benefits in many ways. • Media, music, software and other digital products can be presented on the Web. • Mass customization is possible. The Internet has created a market of mass customization (e.g. Dell). • User personalization of the shopping experience can be achieved (e.g. My Yahoo!).

Mass Customization • Originally, customization is a part of a product strategy for many small businesses (e.g. a tailor measuring a customer for a suit) but it does not scale well. • Mass customization focuses on those efforts at scale.

Mass customization • Mass customization reflects the ability of a company to provide a customized product, based-on an order that is received, that was not created before the receipt of that order. • e.g. Dell produces mass customized products, using technology to enable the process. Its product, a computer, is not assembled until an order is received, and the assembly of the computers is based on the customers' specifications.

Example of mass customization

Example of user personalization

Benefit from a Web presence • Almost all products can benefit from a Web presence. e.g.: • A university (e.g. www.polyu.edu.hk) • A sports star (e.g. http://www.davidbeckham.com) • A car (e.g. http://automobiles.honda.com) • A government (e.g. www.gov.hk) • A non-profit organization (http://www.redcross.org.hk/en/home.html) • Some products are web-based only. • Some products are enhanced by the web.

Online Benefits • The Internet technology brings a new set of desired benefits: • Effective Web navigation, • Quick download speed, • Clear site organization, • Attractive and useful site design, • Secure transactions & privacy, • Free information or services, • User-friendly Web browsing and e-mail reading.

Impact of the Web • The Web can change the entire utility and form of the product (e.g. news: latest news no longer needs to wait for the traditional media deadlines). • The Web can simply serves as a channel for customer support, branding, advertising, community building or retail.

Web-based Products • The Web-based products have evolved recently as a consequence of the evolution of the Web. • Products that improve the web experience: search engines and ISPs, for example. • Products that exploit the unique characteristics of the web, highlighted in the economics section: • Social networking sites (e.g. www.facebook.com) • Online communication (e.g. www.voip.com & www.skype.com) • Wikipedia (http://en.wikipedia.com)

Products improving Web experience • Improved access through the roll out of broadband and wireless access, via companies such as the cable company and ISPs. • Improved search through constant innovation.

Social Networking Sites • Social networking sites take advantage of many of the characteristics of the web. (e.g http://www.facebook.com) • Very low marginal costs. • Allows users to easily connect with users of similar tastes and experiences. The more users, the more useful social networking site is to each user.

Online communication • Taking advantage of network effects (www.voip.com/ & www.skype.com). • The more users that use the service, the more useful the service is to each user. • Takes advantage of the cost structure of adding users (little marginal cost impact) and of moving data over the Internet. • Creating pressure for other telephone systems (cellular or landline systems) to consider their pricing strategies.

Wikipedia • Wikipedia is a product for the Internet community maintained and developed by the internet community (http://en.wikipedia.org) • Freely available on the Internet, with its distributed editorial process via an open source type model, is clearly a challenge to all forms of encyclopedias.

Products enhanced by the Web • Many products are enhanced by the capabilities provided by the Web. • Providing news is an obvious example. • Latest news no longer needs to wait for the traditional media deadlines that are placed on media that need to operate to publication deadlines. • When news happens, it can be reported. • Almost real time in order to retain an audience.

Google News (http://news.google.com/news?ned=us) • Rather than reporting news directly, Google searches the Web for news stories, and determines which are the relevant news stories, displays them, and links to the variety of sources reporting the story. • Aggregating news content allows users to see what is relevant to a broad Web audience, while also getting exposure to a variety of news sources.

Overview • Product Management • Product types and Web impact • Web-based products • Products enhanced by the Web • Brand • Domain name • Customer service / product support • Labeling

Brand • Brand is critical to the success of traditional products. • It provides companies and products with some marketing advantages over competitors with weaker brands. • Ability to charge higher prices for similar products • Ability to launch new products as brand extensions

Brand • A brand includes a name, symbol or other information • that can be trademarked to legally protect it from use by others. • representing a promise or value proposition to its customers. • Brand equity is the intangible value. • eBay, Yahoo! and Amazon rank among the top 100 brands in the U.S.

Using Existing Brand Names On the Web • An existing brand name can be used for any new product: • Makes sense when the brand is well-known + has strong brand equity (value). • For example, Amazon added music CDs, videos, software, electronics, and more to its product mix. When products with offline sales introduce online extensions, choose to use the same brand name (e.g., The New York Times).

Creating New Brands for Internet Marketing • Some firms may not want to use the same brand name online and offline, for several reasons: • If the new product or channel is risky, the firm does not want to jeopardize the brand’s good name by associating with a product failure. • A powerful Internet success might inadvertently reposition the offline brand. • Sometimes the firm wants to change the name slightly for the new market or channel, as a way of differentiating the online brand from the offline brand.

Creating New Brands for Internet Marketing • If an organization wants to create a new Internet brand, a good name is very important. • Good brand names should: • Suggest something about the product (e.g., www.classmates.com), • Differentiate the product from competitors (e.g., www.gurl.com), • Be capable of legal protection. • On the Internet, a brand name should be: • Short, • Memorable, • Easy to spell, • Capable of translating well into other languages.

Branding on Internet • Branding for Internet-based products and services presents some unique challenges, these include: • The lack of tangible product • Newness of the brand • Trust that is gained from the physical infrastructure of a company and product

Strong brand • Major Internet brands have had a habit of shifting over a short period of time. • The strong brands now are likely to be brands that were not so strong very recently. • Did Amazon become synonym of book selling on the Internet? • Amazon is successful in avoiding this and has a broader meaning (i.e. online retailing in general).

Highest Value Global Brands 10-31 source: http://www.macobserver.com/tmo/article/apples_brand_gains_58_percent_in_2011_interbrand_ranking/

Additional products • A key advantage of developing a strong brand is the subsequent ability to launch additional products under the same brand. • Amazon has done this by moving from solely selling books online to selling electronics, music, DVDs and much more. • Google has also launched a number of services, including Google Earth; Google Finance; Froogle and Google Local.

What is a domain name? • Internet Domain Names • The Internet Corporation for Assigned Names and Numbers (ICANN) is a nonprofit corporation that makes decisions about protocol and domain name assignment, registration, etc. • A URL (Uniform Resource Locator) is a Web site address. • Also called an IP address or domain name. • Domain names contain several levels. • The second-level is often the name of the company. • The top-level may be .com or a country name, such as .mx for Mexico.

Domain name • A critical element of a company's brand is the domain name it uses for its Internet activities. • Web-based businesses (such as Google, Yahoo!, eBay, Amazon etc.) have more flexibility in terms of coming up with the appropriate domain name, which ultimately becomes their trademark and brand name.

Domain name • Typically a company will choose its company name as its domain name, but that is not always possible, especially given the Internet is global. • Many company names are not unique (around the world) and there are companies with the same name competing in different markets.

Registering a New Domain Name • More than 97% of words in the dictionary have already been registered as domain names. • Picking the right domain name can make a huge difference. • Directing people correctly to a site. • Building consistency in marketing communications.

Customer Service / Product Support • Customer service is enhanced by the Web for traditional products and services, and critical to the success of software and web-based products and services. • Including product information, FAQs and other useful information on their web-sites.

Rationale for customer support The rationale for providing customer support on the Internet are threefold: • Less expensive than other media for support, • More flexibility in terms of serving customers, and • Self-serve, available when the customer has support issues (not when the company is at work.) • Chatbot: http://www.sitechatters.com

Example: Software development • Product support is essential for software due to • the nature and complexity of the product and • the need for constant upgrades and bug fixes. • The Web not only allows software marketers to answer questions in real time, but also delivers upgrades and fixes when needed. • e.g. Microsoft pushes updates to users as they log on to their computers, and updates to versions of software.

Labeling Labeling has digital equivalents in the online world. Online “labels” provide information about product usage, features, and installing software. Online “labels” also provide extensive legal information about the software product. Online firms may add the Better Business logo or TRUSTe privacy shield to their sites. 10-43

Microsoft’s Terms of Use Label 10-44

IBM TRUSTe labelhttp://www.ibm.com/privacy/us/en/

Internet Marketing (MM 3841)