Hogeschool van Amsterdam Interactieve Media The anatomy of a product and the product concept document Hoorcollege marketing blok 2 week 4

Hogeschool van Amsterdam Interactieve Media Learning goals  By the end of this week’s colleges and the reading you should  Be able to explain what a product is  Be aware of the different types of product there are  Understand the three levels of a product and why this is an important idea  Understand the key decisions that must be made when developing a product  Know how to develop a product concept document

Hogeschool van Amsterdam Interactieve Media Agenda  What is a product?  Why is product important in interactive media  Three levels of a product  Key product decisions  The product concept document  Positioning and the product concept  Summary

Hogeschool van Amsterdam Interactieve Media Where are we now?

Hogeschool van Amsterdam Interactieve Media What is a product?

Hogeschool van Amsterdam Interactieve Media Definition of a product  A product a thing (or a service) that is offered for use to a target customer / user with the aim of allowing them to satisfy needs and/or wants  It helps them achieve their goals  It helps them solve their problems

Hogeschool van Amsterdam Interactieve Media The term “product” is used broadly

Hogeschool van Amsterdam Interactieve Media Products and interactive media  By its very nature interactive media is often about creating “products” rather than simple communication  The level of interaction required is usually (and should be) greater than a traditional piece of communication  To be successful we need to understand how to develop “products” rather than just communications  We can do this by using the tools used to develop “physical” products

Hogeschool van Amsterdam Interactieve Media Three levels of a product

Hogeschool van Amsterdam Interactieve Media A product is more than just its features  When developing products marketers usually think of products as having three levels  The core (kern) product  The actual (tastbaar / werkelijk) product  The augmented (uitgebreid) product

Hogeschool van Amsterdam Interactieve Media Three levels of product

Hogeschool van Amsterdam Interactieve Media Why is this important?  Thinking about a product in three levels is important because: 1.Customers buy benefits or solutions to problems  The Core product focuses on these 2.A product is more than just its features  The actual product tool helps us define a more complete product 3.Actual products today are often quite easy to copy  The brand and the augmented product can give us competitive advantage 4.We can use this tool as the basis for a product concept document  A product concept document is critical to the new product development process since it is the basis of the go/no-go decision

Hogeschool van Amsterdam Interactieve Media Key product decisions

Hogeschool van Amsterdam Interactieve Media Key product decisions

Hogeschool van Amsterdam Interactieve Media The product concept document

Hogeschool van Amsterdam Interactieve Media Introduction  This is a suggested (so not the only possible) format for a product concept document  It is based on the three levels of a product  Part 1: The customer / user covers the core product  Part 2: The product covers the key decisions to be made for the actual product  Part 3: The extras covers the augmented product

Hogeschool van Amsterdam Interactieve Media The customer / user 1.Who is the customer and who is the user?  Firstly are the user and the customer the same person?  You should try to help the reader create a mental picture of the customer / user: you might use your market segmentation and personas to do this 2.What is the need(s)/want(s) that the product satisfies  Customers buy things that solve problems and help them achieve their goals, what are these goals? 3.Why your product?  There are possibly many ways to achieve goals, why would the customer choose your product?  The context-based scenario you developed to show what is wrong with the current situation will be useful here 4.When, where and how will the product be used?  Think about the time and the place the user will use the product  Develop some positive usage scenarios that show how your product would be used

Hogeschool van Amsterdam Interactieve Media The product  Product positioning  How is the product positioned for the target customer?  Quality  What is the requirement for product quality?  Features  Features provide benefits and benefits allow users to achieve their goals  What features does the product need to meet the need(s) that the product will be developed to fulfil?  Beware of “feature bloat”  Brand  What brand will be used - company or product?  Design guidelines  Are there any minimum needs in terms of design (think about size, style etc.). Always leave the designer room for creativity  Packaging  Does the product need any special packaging, or indeed does it need it at all?  Labelling  What labelling is required for: legal requirements, usability, promotion etc?

Hogeschool van Amsterdam Interactieve Media The extras  Installation  Will you offer the customer installation help, do you need to?  Service  What level of service support does the product need? This will be affected by your positioning and the complexity of the service  The level of service for a Chunky KitKat will be different from a piece of software that runs a factory  Help  What sort of help do you offer the customer? Again this is more important for complex products. Sometimes it might be just a manual or a quick start guide, for other products you may need online help or a telephone line.  Manuals  Does the product need a manual? What type of manual, user manual or a full technical manual?  Training  Could you offer the customer training? Does this make sense? If o, then how do you do this?  Delivery  Do you deliver the product?  Credit  Do you offer the customer credit?  Warranty  How long is the warranty on the product?

Hogeschool van Amsterdam Interactieve Media Positioning and the product concept

Hogeschool van Amsterdam Interactieve Media Not everyone accepts new products at the same rate Source: Rogers, E. M., Diffusion of Innovation, Free Press

Hogeschool van Amsterdam Interactieve Media Factors affecting rate of adoption 1.Relative advantage when compared with alternatives 2.Compatibility to consumer’s tastes, needs, attitudes and existing products 3.Complexity - the less complex the quicker adoption 4.Divisibility (deelbaarheid) - how easy it is to trial (to reduce purchase risk) e.g. software 5.Communicability - ease of communicating benefits 6.Perceived risk - the cost to the consumer (in money and pride) if they make the wrong purchase decision Source: Gatignon, H. and Robertson, T. S., ‘A Propositional Inventory for Diffusion Research’, Journal of Consumer Research, 11 (March), pp

Hogeschool van Amsterdam Interactieve Media Good product positioning helps adoption  Product positioning is an important decision in the life cycle of a product because it helps with the product adoption process  Product positioning is about positioning the products benefits in the mind of the target customer  Rather like positioning a company, but the focus is on the benefits of the product  The aim is to overcome some or all of the factors that affect new product adoption

Hogeschool van Amsterdam Interactieve Media Positioning  Once we have chosen our target segment(s) we need to position our organization and its offers  Positioning is about owning a space in your target customers mind

Hogeschool van Amsterdam Interactieve Media Positioning is natural but it can be influenced  We naturally position products  We organize the thousands of offers into categories  The aim of positioning as a conscious process is for us to actively try to get our target customer to position our offer in a certain way  By planning a positioning that is attractive to the target customer  And by designing a marketing mix that supports this positioning

Hogeschool van Amsterdam Interactieve Media Being number 1 is a good positioning strategy  Generally consumers do not remember all the products they are exposed to  They organize them into categories or product ladders  E.g.  Soft drinks: Coke → Pepsi → Fanta  Beers: Heineken → Amstel → Grolsch  The top company is the one they remember most easily

Hogeschool van Amsterdam Interactieve Media More than one way to be number 1  The company or brand that is perceived as number 1 is usually easy to remember  However, there is more than one way to be number 1  Example  Who crossed the Atlantic first by airplane?  Charles Lindenbergh?  Not true?  Allcock & Brown did it first - Lindenbergh was the first to do it alone  Being perceived as number one has a lot of advantages  But there are lots of ways of being number 1  The trick is to know ensure it is relevant to your target customer

Hogeschool van Amsterdam Interactieve Media The number 1 approach to positioning  This approach was proposed by Al Ries and Jack Trout in their book Positioning: The battle for your mind  They noted that only one company can be number 1  But they argued that there are many number 1 positions available, such as:  Biggest  First  Best quality  Most innovative  Etc., etc…  The trick is to understand what will work for your target customer Ries, A. and Trout, J., Positioning: The battle for your mind, New York: McGraw-Hill

Hogeschool van Amsterdam Interactieve Media Three approaches  Ries and Trout suggested 3 possible approaches: 1.Strengthen your current position in the target customer’s mind  Avis were number 2 to Hertz in the hire car market, so they positioned themselves as ‘we’re number two, we try harder’ 2.Look for an unoccupied position in the mind of the target customer  Market holes are places where you can be first (e.g. the number one MP3 player) 3.Deposition or reposition your competitor  Stolichnaya vodka attacked Smirnoff by being noting that only their vodka was actually made in Russia

Hogeschool van Amsterdam Interactieve Media Levels of positioning

Hogeschool van Amsterdam Interactieve Media Positioning and product positioning  The positioning of a particular product does not necessarily have to be the same as the brand or company positioning  It will often be based on the product’s unique benefits  However, a product positioning must not conflict with the brand or company positioning

Hogeschool van Amsterdam Interactieve Media How position a product  Product positioning should be based on the goals of the target customer / user  The positioning should show how the product benefits the target customer in ways that are appropriate to that customer  Like brand and company positioning, being number 1 in some way is one approach  BUT there is another way  The successor approach to product positioning  Your product is the successor (opvolger) to an already familiar product  This is like Ries & Trout’s 3rd option

Hogeschool van Amsterdam Interactieve Media The successor approach to product positioning

Hogeschool van Amsterdam Interactieve Media Why I Dark Side of the Moon wasn’t my first MiniDisc

Hogeschool van Amsterdam Interactieve Media Summary  Interactive media by its nature means that we tend to develop products  Developing products requires a different way of working compared to developing communications  The product concept document is a tool that allows you to develop products more effectively  Positioning your product is essential to success  There are at least two approaches to product positioning  Number 1 approach  Successor approach