1. Product: How the Internet affects product offerings and branding Building long-term customer relationships
MARK Week 12

2. Objectives for today....to understand:
How the Internet affects products and services
Mass customization
Branding
Building long term customer relationships

3. 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, marketing, pricing, distribution, product development) (Weeks 5-12)
Build trusting relationships with customers (Week 13)

4. 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:
Tangible goods
Services
Ideas
People
Places
Or combinations of the above

5. Online value creation
4 general product decisions that marketers make to but together a bundle of benefits that meet customer needs
Product attributes
Branding
Support services
Labeling and packaging
With the exception of labeling/packaging, all can be delivered digitally

6. Internet Product Types
Source: Mohammed et al. Internet Marketing. McGraw Hill

7. Product trends online
Digitization
Mass customization

8. 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?

9. 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

10. 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 product-centric
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

11. Brand as an aspect of product

12. 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

13. 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

14. 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

15. Do strong brands matter online?
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
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

16. Examples of Internet brands with strong equity?
Write down the first 3 Internet brands you can think of

17. Internet brands at home and at work (USA)
AOL
The Weather Network
Source: Nielsen//NetRatings

18. Should Offline Firms Create New Online Brands?
No – keep same brand
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
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

19. 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

20. 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

21. 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”

22. 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

23. Customer acquisition: what is important?
Creating trust by:
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

24. 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

25. 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